I beg to move,

That leave be given to bring in a Bill to amend the Computer Misuse Act 1990; and for connected purposes.

In moving this motion, may I first of all pay tribute to the work undertaken by the all-party group on the internet, which carried out a thorough review of the Computer Misuse Act 1990, and whose recommendations form the basis of the Bill that I present today? I want particularly to thank my hon. Friend the Member for Sittingbourne and Sheppey (Derek Wyatt). He presented a similar Bill to the House in March of this year, but in the end it was defeated by the timetable for the general election.

My Bill will revise the 1990 Act to take account of commitments made in European instruments in respect of combating and effectively punishing attacks against computers, and it will update the Act in other areas. It will amend section 1(3) to increase the term of imprisonment for a related offence from six months to two years. It will amend section 3(7) to increase the term of imprisonment for a further related offence from five years to 10 years. It will amend section 3 in order to clarify that all means of interference with a computer system are criminalised. In particular it will ensure that adequate provision is made to criminalise all forms of denial-of-service attacks. It will also give effect to article 6(l)(a)(i) of the convention on cybercrime, which requires criminalisation of the distribution of, or making available of, a computer password through which a computer system is capable of being accessed, with intent to commit an offence.

This Bill will, I hope, meet with the House's approval. It contains only six clauses, has no financial implications, implements measures that have been approved by Ministers and Parliament and is, I hope, relatively simple. As last year's report by the all-party group on the internet demonstrates, these measures already have cross-party support. I trust this will remain the case after I finish my speech. As the report pointed out and as every Member of this House will doubtless accept, the worldwide web has changed out of all recognition in the past 15 years, as has the nature of cybercrime. The media like to imagine that hacking, virus proliferation and denial-of-service attacks using e-mail are the product of bright but lonely and socially challenged teenagers sitting in their bedrooms. That is an outdated, inaccurate and, I think, dangerous notion. Those who regularly and increasingly hold website operators to ransom are more likely to be members of an organised crime syndicate than the school computer club. It is time that cyber crime was recognised for the serious crime that it is.

Following the recent sentencing of teenager Joseph James McElroy to 200 hours of community service for breaking into a US Government laboratory system, detective chief superintendent Len Hynds, the former head of the national hi-tech crime unit, called on the Government and the courts to reform sentencing policy to reflect the damage caused by hackers breaking into government and private sector computer systems. He said:

"The internet has grown up and we need to say to people who think its fun to rifle through people's private files that they are actually committing a crime".

My Bill seeks to specify a new offence of denial of service. A denial-of-service attack occurs when a deliberate attempt is made to stop a computer performing. Examples include attempts to flood a network, thereby preventing legitimate network traffic; attempts to disrupt the connections between two machines, thereby preventing access to a service; attempts to prevent a particular individual from accessing a service; and attempts to disrupt services to a specific system or person.

Denial-of-service attacks can essentially disable one's computer or one's network. Some denial-of-service attacks can be executed with limited resources against a large, sophisticated site. For example, an attacker with an old PC and a slow modem may yet be able to disable much faster and more sophisticated machines or networks. One form of such attack could mean a large number of remote computers being orchestrated to attack a target at the same time. In some cases, the attacks overwhelm the connecting links to a machine rather than the machine itself. That can result in significant collateral damage that extends beyond the machine being attacked. Denial-of-service attacks are extremely common on today's internet. At the lower end of effectiveness, the blips in traffic are hardly noticeable, but we are told of cases at the other end in which large university networks have been made unusable for hours at a time.

The chief constable of Greater Manchester, Michael Todd, was bombarded with thousands of threatening e-mails in a denial-of-service attack shortly before the Day bank holiday this year. At one point, 2000 e-mails were being sent every hour. The purpose of the attack was to crash the force's computer systems through the volume of e-mails being sent. Cambridgeshire police were subject to a similar denial-of-service attack almost two years ago, when thousands of spam e-mails told recipients that their credit cards were about to be charged for an iPod that they had purchased unless they phoned a customer service number. The customer service number turned out to be the switchboard at Cambridgeshire police, which was deluged by thousands of people who had received the hoax e-mail. Closer to home, a gun control website contacted me two years ago to complain that one of my constituents, a gun enthusiast, had bombarded the site with so many e-mails over a short period of time that their server had crashed.

The Computer Misuse Act 1990 came into force on 29 August 1990 and specifies offences for attacks against computer systems or data. Criminal denial-of-service attacks are regularly made on gambling websites both in the United Kingdom and elsewhere. Such attacks are invariably accompanied by demands for amounts between £10,000 and more than £100,000 in order to make the attacks stop. The impact on gambling businesses has been severe. The national hi-tech crime unit has become involved in the investigations, but the perpetrators are believed to be based abroad, which sets some limits on what can be achieved quickly.

The second part of the Bill deals with the length of sentences. At present, offences under section 1 of the Computer Misuse Act 1990 can be dealt with only in a magistrates court, where the maximum penalty is six months in prison and/or a fine of £5,000. A conviction in a higher court currently applies only to offences defined in sections 2 and 3 of the Computer Misuse Act. In those cases, the maximum penalty is five years in prison or an unlimited fine.

By increasing the tariff on these crimes, the House would be sending a message to the courts and the public prosecution service that these crimes must be taken seriously and that, where appropriate, custodial sentences must be applied. Home Office figures show that, when an offence under the Computer Misuse Act is the principal offence with which someone is charged, only about a third of those found guilty are given custodial sentences. When such an offence is not the principal offence, the proportion is very small indeed.

It is regularly claimed that the cost of cleaning up virus or worm attacks runs into billions of pounds. The current level of sentences does not reflect the seriousness of such offences. This Bill would therefore raise the maximum sentence for a conviction under section 1 of the 1990 Act to two years. That would have a number of indirect benefits. It would make an offender subject to extradition procedures, and also make it possible to prosecute for a criminal attempt, even where such an attempt had not succeeded.

Before I conclude, I wish to draw the House's attention to a recent NOP survey conducted on behalf of the national hi-tech crime unit. It estimates that the minimum cost of the impact of high-tech crime on UK-based companies with more than 1,000 employees is no less than £2.5 billion every year.

As the worldwide web grows both in size and in its influence on all our daily lives, the threats posed to all of us by cybercrime also grow. Although high-profile denial-of-service attacks have been made against e-commerce and, especially, gambling sites, the UK Government and the country's critical infrastructure are also vulnerable. It is essential that we have a law in place to make prosecution possible when offences are committed, because that will send the strong and unambiguous message that e-crime will be treated with the utmost seriousness.

I commend the Bill to the House.

Question put and agreed to.

Bill ordered to be brought in by Mr. Tom Harris, Mr. Ian Austin, Mr. John Spellar, Gordon Banks, Michael Gove, Jessica Morden, Ms Emily Thornberry, David Mundell, Derek Wyatt, Charles Hendry, Mr. Alan Reid and Michael Fabricant.

Computer Misuse

Mr. Tom Harris accordingly presented a Bill to amend the Computer Misuse Act 1990; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 2 December, and to be printed [Bill 42].

I inform the House that I have selected the amendment in the name of the Prime Minister.

I beg to move,

That this House commends the Parliamentary Ombudsman and the Citizens Advice Bureau on their reports on Tax Credits; notes with concern their conclusions that many thousands of low income families are suffering financial hardship as a result of the serious problems with the administration of tax credits; further notes the huge cost to the taxpayer of these problems; calls on the Government to implement as soon as possible all the Ombudsman's recommendations to improve the tax credit administration; in particular calls on the Government to adopt the Ombudsman's recommendation to set up a statutory test for recovery of excess payments of tax credits consistent with the test that is currently applied to social security benefits, with the right of appeal to an independent tribunal and calls on HM Revenue and Customs to suspend all recovery of tax credit overpayments until this reform has been completed; and calls on the Chancellor of the Exchequer to explain the Government's failure to provide low income families with the service they deserve; and requests that he conduct a fundamental review of the structure and administration of tax credits, as recommended by the Ombudsman.

This is my first opportunity in the House to express my sadness and sorrow to the victims of last week's murderous bombs, and to the injured who continue to suffer. I have just seen pictures on the television news of those who died. That brings home in a very graphic way how many lives have been so cruelly snatched away from us. I think that is an appropriate opening to an Opposition day debate, as democratic debate must continue undaunted.

Today's debate is about people like Mr. Crow and his family, from Dover. They have two kids, a mortgage and no spare cash. Mr. Crow recently took a job as a carer and became entitled to tax credits. When his pay rose, he did what he was supposed to do and informed the Inland Revenue. He was told that the increase in his pay was to be disregarded. A year later, he has been told that he has been overpaid and that he now must pay back the difference. His working tax credit has been reduced from £35 a week to £2.44 for the entire month. That family has been forced to go into debt or lose their home.

This debate is also about people like my constituent Helen Thompson, a single mother. She contacted the helpline and was told that she could keep an overpayment of £3,000, even though she had offered to pay it back immediately. Out of the blue, the Revenue demanded that money back, with the result that she could not meet her child care costs. She faced losing her job, and only the intervention of my constituency office caused the Revenue to change its position.

This debate is also about people like the lone parent in the report by Citizens Advice, who received no tax credit payments whatsoever for the last few weeks of the financial year. She had to resort to Salvation Army food parcels to feed her children.

Every Member of the House knows that, sadly, those are not isolated examples. Citizens Advice handled 150,000 cases in the last year alone. The parliamentary ombudsman now spends a quarter of her time on tax credit cases, and the Revenue has recently admitted to me in writing that it is dealing with 51,000 complaints, 9,000 of which were referred to it by Members.

The blunt truth that the Government have to confront is that the tax credit system

"is failing the very families most in need of extra money, causing hardship that the system is designed to prevent, and making it more difficult for people to save or to hold down a job, rather than supporting saving and employment."

Will the hon. Gentleman give way?

I am delighted to give way to the architect of tax credits, as I have just read out a quote from Citizens Advice.

Tax credits have helped to reduce child poverty by a million since 1997, and the Government are committed to the goal of halving child poverty by the end of the decade. Does the Conservative party share that goal?

I am absolutely delighted that the hon. Gentleman intervened; I suspected that he might be in the Chamber today. In his constituency, 4,100 of his constituents received the wrong award, which was 41 per cent. of the people who applied. In his constituency alone, £2.9 million was overpaid to people he represents. If he is happy with that record, so be it; I do not think he should be. On child poverty, I know that he likes to do his homework so perhaps he should read the report from the Institute for Fiscal Studies, "Poverty and Inequality in Britain: 2005", produced earlier this year, which states that owing to the administrative problems with the new tax credits there was an increase in child poverty by 90,000 after housing costs and 80,000 before housing costs. I am not sure whether the hon. Gentleman has read that document, but I suggest that he does so before he intervenes again.

rose—

Oh, the hon. Gentleman has already read it.

I am grateful to the hon. Gentleman for giving way again. I shall rephrase my question. Child poverty rose by 4 million between 1979 and 1997. As a result of the working families tax credit and the introduction of child tax credit, child poverty has now fallen by a million since 1997 and, because of tax credits, is forecast to fall further. The Government are committed to halving child poverty by the end of the decade and to abolishing it in a generation. Is the Conservative party committed, like the Government, to the abolition of child poverty and to halving child poverty by the end of the decade? It is a simple question: yes or no?

We are committed to policies that reduce child poverty. We are not committed to policies that have increased child poverty. As the IFS said, the introduction of the new tax credits has led to an increase in child poverty by about 90,000 after housing costs and 80,000 before housing costs. The hon. Gentleman says that the system has helped all those families, but he has obviously not read the reports that we are debating today—for example, the CAB report, which states that the tax credit system has plunged many below the breadline and into mounting debt; or the parliamentary ombudsman's report, which talks of families having to borrow money from family and friends to support their children, using up their life savings or running up credit card debts to pay for child care costs, buy food and get to work.

rose—

rose—

I will happily give way to the other Ed, the other architect of the tax credit policy. Is the hon. Gentleman proud of a system that has plunged many below the breadline?

I am grateful to the hon. Gentleman for giving way. We are asking for simple intellectual honesty from him. Under the tax credit system, child poverty has fallen by about a million. Does he acknowledge that, and does he acknowledge the responsibility of tax credits in cutting child poverty? It is a simple question—yes or no?

No, I do not acknowledge that the present tax credit system has helped in the reduction of child poverty, because I have in front of me the IFS report, which states that the administrative problems with the new tax credits led to an increase in child poverty by 90,000. That is in the document.

rose—

Unless the hon. Gentleman has read the document—[Interruption.] He has? Then I will give way.

The hon. Gentleman says that the present system of tax credits has not helped to tackle child poverty, but One Parent Families said in its Budget submission in 2005:

"Tax Credits have delivered substantial improvements in the levels of income delivered to lone parents, and evidence suggests that they will have helped achieve the impressive expected reduction of child poverty by a quarter by 2004/05."

That organisation is saying that we have helped to tackle child poverty through tax credits.

The hon. Gentleman obviously has not read the words of the Child Poverty Action Group—if he wants to trade organisations—which says that the way that the tax credit system operates has created, rather than prevented, hardship. I know that the hon. Members for Doncaster, North (Edward Miliband) and for Normanton (Ed Balls) are fiercely keen to defend their reputation and that, to an extent, their reputation depends on the success of tax credit policy—we will see how that fares over the next couple of years—but they should own up to the mistakes. The very fact that they do not own up to them shows how out of touch many Labour Ministers and those who advise them have become with the problems that their tax credit system has created. The person who is more disconnected from that reality than anyone else is the Chancellor of the Exchequer himself: the man who has put tax credits at the heart of his empire.

We understand that the Chancellor is in Brussels today, but he must be as disappointed as we are that he has missed yet another chance to defend his policy to the House, for he invented tax credits—no one else. He made them complicated and intrusive—no one else. He presided over his own Department's errors and incompetence—no one else. Yet when it comes to admitting his mistakes, it is anyone else but the Chancellor. When it comes to explaining how the Government are sorting our his fiasco, it is anyone else but the Chancellor. Above all, when it comes to apologising to the thousands of families who are suffering hardship as result of his chaotic administration of tax credits, it is anyone else but the Chancellor.

The hon. Gentleman mentioned figures of 50,000 or 150,000 complaints. My understanding of tax credits is that they have helped—or changed the income of, to put it in more neutral terms for his purposes—6 million families. With a back-of-an-envelope calculation, that suggests an administrative problem of about 3 per cent. on his figures. The Government admit in their amendment to the Opposition motion that there are administrative problems. All hon. Members admit that there are administrative problems. First, will he say what percentage of administrative problems he thinks is acceptable for any Department? Secondly, to change the focus, will he say whether he supports tax credits, because he is arguing that they are putting families into poverty, yet his own motion does not pursue the logic of that and suggest that they should be abolished?

Order. Shorter interventions would be helpful.

Thank you, Mr. Speaker. Perhaps the hon. Gentleman will catch your eye later, so that he can explain that the error rate is not 3 per cent. He should consider his own constituency. Of the 8,200 tax credit awards there, 1,100 were unpaid and 2,600 were overpaid. That is very considerably more than 3 per cent. Indeed, in total the overpaid and underpaid awards come to almost half the entire tax credit awards in the country. We are not talking about small amounts of administrative error.

We have finally managed to bring Browne to the Dispatch Box, but with respect to the Chief Secretary, we have got the wrong Mr. Browne. The Prime Minister has said sorry and the Paymaster General has said sorry, but we have not heard a word from the architect of tax credits himself. Indeed, the last time that the Chancellor answered any questions on tax credits in Parliament was more than a year ago, and he has had plenty of opportunities to do so.

rose—

Perhaps the hon. Gentleman will apologise on behalf of the Chancellor.

I should like to ask the hon. Gentleman three simple questions. Does he accept that child poverty trebled when the Conservative party was in power? Does he accept that it has been cut by 1 million under this Government? Will he tell us—with a straight answer, yes or no—whether he supports the Government's objective of halving child poverty by the end of the decade?

The hon. Gentleman has obviously not listened to the earlier exchanges. Of course any party that believes in a civilised and compassionate society wants to reduce child poverty. The point of the debate is that many tens of thousands of families have been plunged into child poverty as a result of the tax credit system fiasco. If he has not yet become aware of that in the couple of months that he has been a Member of Parliament, I suggest that he hold more constituency surgeries and he will discover what is going on in his constituency.

Will my hon. Friend tell us later how much the implementation of the tax credit system has cost the country? Bearing in mind that it is fundamental to a lot of people, how much will all the complaints and the wrong awards cost the nation? How much of the money that we want to go to people who need it is thus not arriving there?

My right hon. Friend does not have to wait for the rest of my speech because I am happy to tell him now that the cost of the administration of tax credits has increased tenfold to more than £400 million. More than 3,000 people are now employed just on the helpline. We are all, as taxpayers, paying for the mess that the Chancellor has created.

How did we get into this mess? We all know that the introduction of tax credits in 2003 was shambolic. No one who was an MP at the time is likely to forget that. Hundreds of thousands of families were left without the financial support on which they relied. At the height of the crisis, there were 1.7 million attempts in a single day to contact the Revenue helpline—[Interruption.] The hon. Member for Normanton is muttering. I suspect that he had a special phone line in the Treasury when he was working there, but none of the 1.7 million people who were trying to contact the Revenue got hold of his number—perhaps they would have shouted all sorts of abuse at him if they had.

It took four months before the system was stabilised. Thanks to the work of the Public Accounts Committee, we now know that the testing period for the new information technology system was cut significantly before it went live. We do not know who ordered it to be cut, so perhaps the Chief Secretary to the Treasury can tell us today. We also still have not seen the Government's gateway review, which said that the IT system was going to work well, so will the Chief Secretary publish that without further excuse?

Since the initial fiasco, we have had one software problem after another. Some 500,000 families received duplicate payments and 82,000 households had to find the cash to repay the Revenue for its own mistakes. In the past financial year, 60,000 people who told the Revenue that their income had changed found that their partners' income was reduced to zero as a result. They were then overpaid tax credits that were clawed back from them. The Revenue might think that the mistakes have been rectified, but families are still living with their consequences, as the reports that we are examining today make clear.

One mother facing an overpayment of £5,000 told the ombudsman:

"we are in the process of remortgaging our house to cover payments for credit card and loan repayments. My husband and I are at breaking point due to the pressure and stress."

I am sure that the hon. Member for Chorley (Mr. Hoyle) has heard similar examples in his constituency surgery.

The hon. Gentleman is generous in giving way. Of course we have heard about mistakes and many complaints have been made. Any MP who holds surgeries will know the number of people who come to them with problems, but allowing for that, everyone in the Chamber will recognise that child poverty must be something that we put into history. Will the hon. Gentleman make it clear whether the Conservatives would, if elected, scrap tax credits? His answer to that question would address a lot of the issues today.

With the greatest respect to the hon. Gentleman, I shall get to the future of the tax credit system later in my speech, so I shall happily take an intervention then. Again he talks about isolated cases, but of the more than 11,000 people in his constituency who receive tax credits, half were made an incorrect award. He cannot seriously be happy with that as the Member for Chorley.

Never once have I stated that I am happy when judgments are wrong—far from it. I am the first to complain to the Minister and to take up issues on behalf of my constituents. I hope that other hon. Members also do that. We do not need any lectures from the hon. Gentleman.

I was not giving the hon. Gentleman a lecture, but merely filling him in with the details about his constituency.

The Paymaster General gives the impression that the difficulties are teething problems that are on their way to being resolved. However, as we all know from our surgeries—this is probably as true in Chorley as it is in Tatton—the problems continue. We know of families who found that eligible children were simply deleted altogether from a tax credit award. We know of people whose repeated attempts to inform the Revenue of overpayments have been ignored. We know of mothers whose Sure Start maternity grants have been refused because the system said that they were not in receipt of child tax credit, although in fact they were. We know of people who have received multiple award notices on the same day, each saying something completely contradictory.

When people try to get in touch with the Revenue to ask for help, what do they find? In the words of the ombudsman, their experience is a "very dismal one". People phone, write, complain and appeal, but they still fail to get a satisfactory response for months, despite the fact that, as I pointed out to my right hon. Friend the Member for West Derbyshire (Mr. McLoughlin), more than 3,200 people now work on the helpline and more than 400 people are dealing with complaints. That is the system today, not during the crisis of the initial launch or the computer errors that affected hundreds of thousands, but now, two years after the tax credits system was launched. It is all documented in the damning independent reports of the parliamentary ombudsman and Citizens Advice.

Will the hon. Gentleman give way?

I gave way to the hon. Member for Chorley (Mr. Hoyle) and I now want to make progress.

How could the Paymaster General have possibly told Parliament:

"The system has been stable and performing very well . . . for well over a year"?—[Official Report, 7 February 2005; Vol. 430, c. 1254W.]

The parliamentary ombudsman certainly found it puzzling. She says in her report:

"the cases I have investigated lead me to the conclusion that such reassurances"

by the Paymaster General

"did not give a complete picture of what has been happening".

That is a devastating and, as far as I am aware, an unprecedented rebuke of a Minister by Parliament's watchdog. Why did the Paymaster General say that the system has been performing very well? Did she not see what every other MP sees in their surgeries, or did she choose not to tell Parliament the whole story? I hope that she gives a full account of herself today.

What hundreds of thousands of low-income families want to know is not how the Government got into the mess but how they are going to get out of it. That is the second issue. The Paymaster General told us on 26 May this year that she was taking steps to sort out some of the ongoing problems. It was at least a recognition that we were no longer dealing with teething problems. I welcome those proposals—for example, making the award notices more intelligible and improving the helpline service—but frankly the reforms go neither far nor fast enough.

Citizens Advice agrees with that, as the Paymaster General knows. It explains that even the modest proposed changes could take up to 18 months to implement. That is 18 months of poor information, more bad advice and more inadequate support. It is not acceptable. The Chief Secretary should confirm—I assume by his presence that he is now in charge of tax credit policy—that the Government are going to implement in full the 12 specific recommendations in the parliamentary ombudsman's report. They go much further than the changes announced by the Government and include clearer information about overpayments and additional tax credits, training for staff to recognise cases of hardship, and automatic payment of additional tax credits to overpaid families in receipt of income support.

Will the Chief Secretary also immediately suspend plans to move a further 800,000 of the lowest income families who currently receive their tax credits from Jobcentre Plus to the Treasury's chaotic systems until the problems are resolved? No one else should be subjected to yet more misery and hardship at the hands of this Treasury.

There is a specific recommendation on the recovery of overpayments that is particularly important. The ombudsman says that she does not consider that

"the present internal system for determining whether sums should be repaid operates in a fair and transparent manner."

That is why she suggests introducing a statutory test for the recovery of overpayments and a right of appeal to an independent tribunal—in other words, a test that puts the onus on the Revenue to get the awards right in the first place and that is consistent with that which has long been applied to social security benefits, which everyone but the Chancellor of the Exchequer knows are the same as tax credits.

I agree with the ombudsman on that statutory test. It is why it is part of the motion. So does the right hon. Member for Birkenhead (Mr. Field) who, with other Labour MPs, has tabled an early-day motion on the subject. Will the Chief Secretary confirm that the Government will introduce that statutory test and whether he is going to implement the other recommendations in the ombudsman's report?

That brings us to the third issue. In the absence of a statutory test, what is the Government's position on reclaiming overpayments? We have finally discovered that, in the first year of operation, the Revenue overpaid an astonishing £1.9 billion to 1.9 million people. When my hon. Friend the Member for North Thanet (Mr. Gale) asked the Prime Minister about overpayments, he said:

"the Paymaster General has said already that we will not seek to get the money back if the error is on the part of the Inland Revenue."—[Official Report, 22 June 2005; Vol. 435, c. 798.]

That is what the Prime Minister said at the Dispatch Box. In case people think that it might have been a mistake, he repeated it a week later at Prime Minister's questions. That is not consistent with what the Paymaster General is telling us. She says that overpayments caused by errors by the Inland Revenue will only be written off if the claimant could not possibly have spotted the error themselves. Indeed, we are now told—perhaps the Chief Secretary can confirm this—that 98 per cent. of overpaid tax credits have been automatically reclaimed. Is that correct? If it is, it is very different from what the Prime Minister promised people from the Government Dispatch Box.

It might help the hon. Gentleman if I say that I received a letter from the Prime Minister only yesterday confirming that, although the policy is to write off overpayments where there is an official error, he would like to clarify that this is only where the claimant should have reasonable cause for thinking that they were paid the right amount. In other words, it is not a change of policy but exactly as it was before.

There we go. Perhaps the Prime Minister will be seeking an early opportunity to make that clear to the House. It seems like another battle between No.10 and No.11 that No.10 lost.

The hon. Gentleman has misquoted my right hon. Friend the Prime Minister.

I did not misquote the Prime Minister. If the hon. Gentleman turns to column 798 on 27 June, he can read the Prime Minister's words, which I repeated in full. Perhaps the hon. Gentleman will join me in calling on the Prime Minister to explain why he misinformed the House not only on one occasion, but twice.

Can my hon. Friend throw any light on why so many mistakes have been made by the Inland Revenue? Is there a common theme to this litany of error and what steps, if any, have the Government been taking to ensure a higher level of competence?

My hon. Friend, with great prescience, brings me to the last section of my speech. He asks whether there is a common theme. There is a common theme in a number of different ways. For example, there is a common theme with the computer projects that the Government have introduced throughout Whitehall. There is a common theme with the various pet projects that the Chancellor has dipped his fingers into, such as individual learning accounts, stakeholder pensions or pension credit. One of my favourites—it is little known—is the link-up between Cambridge university and the Massachusetts Institute of Technology that the National Audit Office had to crawl all over. I can see that this is all bringing back happy memories for the hon. Member for Normanton.

The hon. Gentleman says that he is coming towards the end of his speech. I hope that before he resumes his place he will answer one question that poses in a different form questions that have already been asked. No one can say that my right hon. Friend the Chancellor of the Exchequer is not keen to redistribute income. Taxpayers have given up a 5p reduction in the standard rate of tax to finance tax credits. If the hon. Gentleman were Chancellor, would he use the money in exactly the same way or in a different way?

That is an entirely fair question and it is literally a matter to which I am turning. Perhaps the right hon. Gentleman, who has a bit more patience than some of his right hon. and hon. Friends, will listen for a second. As he knows, there is a growing body of opinion that says that we need a far-reaching review of the tax credits system. In her review, the ombudsman says that it is rightly a task for Parliament and the Government—not for her—to address the

"fundamental question as to whether, for people on modest incomes who have to budget and plan their finances carefully to manage their lives, the inbuilt instability or uncertainty really works."

The chairman of the Inland Revenue, the man charged with administering tax credit, thinks that we need a review. In the Financial Times last week he said:

"if there are real problems in discharging the policy"—

on tax credits—

" . . . then you'll have to debate what the right policy is."

We know that the Prime Minister would probably support a review. It is an open secret that he has never liked the Chancellor's tax credits. If we read the Westminster Hall debates that have been held on this subject, it is clear that a growing number of Labour Members have called for a review. Even the hon. Member for North Durham (Mr. Jones), who, I understand, is one of the Chancellor's henchmen, has called for a fundamental, root-and-branch review. All those Members are right. We need that fundamental root-and-branch review. We need to ask whether the current system of annual payments can ever meet the needs of people whose income and circumstances can change week by week. We need to ask whether people on low incomes will ever have the flexibility in their budgets to repay the overpayments that are an inherent part of the current tax credit system.

We need to ask whether we should consider moving to a system where payments are fixed for longer and require fewer changes. That is something to which I am attracted, but it is something that should be reviewed before we come to a definite conclusion. We need to ask whether it is right that hard-working families on average incomes are paying taxes to fund means-tested benefits for people earning £66,000 a year. That is something that a review should consider.

Tax credits were designed to tackle child poverty, but as I have said repeatedly, the Institute for Fiscal Studies has shown that their administration has plunged people and their children into poverty. There could hardly be a greater indictment of the Chancellor's policy. Families have been pushed below the poverty line by Government incompetence. Single parents have been forced to rely on Salvation Army food parcels to feed their children. Tens of thousands of people have been driven to despair and hardship.

rose—

With the greatest respect, I am about to finish my speech.

Is that really what we want from a 21st-century welfare system? Is it not time that that the Chancellor and his minions took a long hard look at his cherished tax credits? Is it not time that he had the courage to take the rap for his own mistakes?

I beg to move, leave out from "House" to end and add

"supports the Government's strategy to make work pay and provide financial support to families through tax credits; welcomes the fact that over 6 million families and 10.5 million children are benefiting from tax credits, with first year take-up of around 80 per cent., compared to just 57 per cent. for the Family Credit system inherited by the Government; recognises that far more families than ever before are benefiting from help with childcare costs; notes that tax credits are central to the Government's goal of abolishing child poverty; further notes that tax credits have helped ensure there are 1.5 million fewer children in poverty and have helped 275,000 lone parents into work; recognises the need to balance the demands for a simple system with the need for a system that responds to people's changing circumstances, giving most help to families when they need it most; acknowledges the IT and administrative problems that accompanied the early stages of implementation; and welcomes the measures announced by the Government for improving the administration of the system."

May I echo the entirely appropriate words of the hon. Member for Tatton (Mr. Osborne) about the sad events and consequences of the terrorist attack in this great city last week? We have all been moved and impressed by the dignity and resilience of the people who were tragically affected by those events. Our thoughts continue to be with them, and I am grateful to the shadow Chancellor for his words as, I am sure, are all hon. Members.

The shadow Chancellor made two allegations about my right hon. Friends misleading the House, whether inadvertently or otherwise. The accusation that my right hon. Friend the Paymaster General misled the House about the stability of the IT system is incorrect. I accept that the shadow Chancellor relied on the ombudsman's report for his assertion, and that he was reporting it to the House. My right hon. Friend, however, did not mislead the House. There has not been a failure of the tax credit computer system since tax credits were introduced in April 2003. The Paymaster General made a statement about the performance of the IT system, its speed and reliability over the previous year. I am happy to confirm that the system has been performing well in terms of speed and availability for that period. There were, of course, well-publicised problems—we will come on to deal with some of them—in the early days when the system did not perform as expected. With a system of this size and complexity, there are occasional glitches, but I am happy to refute the assertion that my right hon. Friend the Paymaster General misled the House.

As for the assertion that my right hon. Friend the Prime Minister misled the House by saying that overpayments due to error would be written off, that is not the case. Both the Prime Minister and the Chancellor reported accurately the policy that Her Majesty's Revenue and Customs write off overpayments where there is official error. There is, however, a long-standing principle that official error requires both a mistake on the part of the Revenue and reasonable belief on the part of the claimant that they were being paid the right amount. Neither the Prime Minister nor the Chancellor were doing anything other than reporting the long-standing principle.

Does the Chief Secretary expect us to take that response seriously? When the Prime Minister was asked in the House whether there would be an amnesty in each and every case where the Treasury was responsible for an overpayment, he said that

"we will not seek to get the money back if the error is on the part of the Inland Revenue."—[Official Report, 22 June 2005; Vol. 435, c. 798.]

What does the Chief Secretary think people in the country would have understood by that?

I am grateful to the hon. Gentleman for giving me the opportunity to restate the position. Of course, that was an expression that there would be a write-off if there was official error. He knows—

An error by an official.

Well, an error by an official. I do not want to be pedantic. The hon. Gentleman reads the quote to me and it contains the phrase, "an error by an official". As I understand it, that is otherwise official error, is it not? I think I am right.

Official error has a long-standing definition, which includes a mistake on the part of the Revenue and the claimant reasonably thinking they were being paid the right amount. The qualification is necessary to strike the right balance between fairness to claimants and fairness to taxpayers as a whole. I shall come later to the question of the extent to which the overpayments could or could not have been known to individuals, but it could not possibly be the case that it would not matter to what extent a claimant knew that the error had been made.

The Chief Secretary's defence of the Prime Minister is based on the proposition that there is a long-standing definition of the concept of official error, which includes the implied terms to which the Chief Secretary refers. If the definition is so long-standing, can the right hon. Gentleman point to any previous example of a Government claiming that in their defence?

I am not in a position to do that, but I suspect that, in the context of decisions as to whether or not errors are official errors, these tests are regularly applied. I shall research the matter and if I am in a position to do so, I shall write to the right hon. Gentleman.

I am grateful to the Chief Secretary for at least being straight with the House. I give notice that I shall table a question to the right hon. Gentleman and give him the opportunity to set before the House the precedents that he is claiming.

I am grateful to the right hon. Gentleman for that opportunity, but I have already said that I would do that.

I wish to clarify the fact that the words "official error" were not part of the Prime Minister's response. He said that

"we will not seek to get the money back if the error is on the part of the Inland Revenue."—[Official Report, 22 June 2005; Vol. 435, c. 798.]

How does the Chief Secretary explain the statement that the Chancellor of the Exchequer made on 23 June to GMTV, when he said:

"Where there's been a mistake by the Inland Revenue and where we are to blame as a Government then we will not take the overpayment"?

There is nothing in that about official error at all.

I rest my case on the position as I have explained it to the House. I have made my position clear and I shall follow up with the further research that I have undertaken to conduct. In my remarks to the House this afternoon, I intend to answer each of the points made by the hon. Member for Tatton, the shadow Chancellor, but—

Perhaps the situation is different in Scotland, but when I practised as a solicitor in England, there was the concept of mistake of law and mistake of fact. If someone was overpaid by some body, part of the test that the court would apply was whether they could reasonably have realised that that overpayment was an overpayment. That has been an inherent part of the English legal system for decades.

I am grateful to my hon. Friend for his contribution to this part of the discussion. I do not think other hon. Members would thank me for continuing it. I have made my position clear. I ought to be able to provide the information that the right hon. Member for Charnwood (Mr. Dorrell) seeks. I will try to do that, to support it. Having practised law in Scotland, I am very familiar with the sort of principles to which my hon. Friend the Member for Wolverhampton, South-West (Rob Marris) refers.

Will the Chief Secretary give way?

No, I think I have said enough on the matter. I intend to make some progress with my speech.

As I said, I intend to answer each of the points made by the hon. Member for Tatton, but I find it extraordinary that in the speech that we have just heard, there was barely any mention of the benefits that the Government's system of tax credits is bringing to millions of hard-working families right across Britain. Even when the shadow Chancellor was given the opportunity to comment on what is now accepted in relation to child poverty, he could not bring himself to concede that that progress had been made.

Six million families now benefit from tax credits. As a result, 10.5 million of the nation's 13 million children now receive more generous support—that is 10,000 families on average in each of my right hon. and hon. Friends' constituencies; indeed, in each right hon. and hon. Member's constituency. The shadow Chancellor is no doubt armed with figures from my constituency, as from everybody else's, about the number of overpayments or underpayments that may have been made, but the fact is that on average, across the United Kingdom, 10,000 families in each of our constituencies are benefiting from this policy.

In the first year of the new system, take-up of tax credits was around 80 per cent., compared with just 57 per cent. for the family credit system that we inherited when we came to power in 1997.

As my hon. Friend the Member for Tatton (Mr. Osborne) pointed out, in many constituencies up to half of all claims are calculated wrongly and underpaid or overpaid. Does the Chief Secretary think that that level of error is acceptable and, if not, what level of error does he think acceptable?

The hon. Gentleman anticipates part of the speech that I wish to make. I do not accept that all those calculations are in error, and it should become clear to him, as I develop my remarks, why that is. On a pedantic point, the figure of 50 per cent. as regards the calculations involving overpayment and underpayment is not entirely correct—although it is not far short of correct.

As a result of the Government's strategy to make work pay and to provide financial support for families through tax credits, there are now 1.5 million fewer children in poverty, and 275,000 lone parents have been helped into work. Reforms since 1997 mean that by October this year families with children will, on average, be better off to the tune of £1,400 a year in real terms; and those in the poorest fifth of the population will be, on average, £3,200 a year better off. While it is right that we should debate the effectiveness of the administration of the system—I shall come to the specific points made by the shadow Chancellor in due course—the extent to which hard-working families have benefited from credits and the contribution that credits have made to tackling poverty is the proper context in which today's debate should be seen.

Before I deal with administration, I want to remind the House why we introduced the tax credits system and what it replaced. The family credit system that we inherited had several problems, as identified in the 1998 report on work incentives by Martin Taylor. In particular, four areas gave us considerable concern: first, it acted as a disincentive to finding work; secondly, it was an insufficiently generous award; thirdly, it was fundamentally inflexible and unable to take into account changes in circumstances; and fourthly, it gave too little assistance with the costs of child care provision.

I might point out that the Liberal Democrats accepted that analysis at the time, and it was further supported by their then spokesman, the hon. Member for Northavon (Steve Webb).

I presume that the right hon. Gentleman is going to describe the whole series of amendments that my hon. Friend the Member for Northavon (Mr. Webb) tabled, including on having a statutory test and dealing with the problem of overpayments.

I have no such intention, because most of those amendments were withdrawn after debate and explanation of the way in which the system would work, and after the hon. Member for Northavon had expressed satisfaction with those explanations.

At some stage, it might be useful to hear from the Liberal Democrats why they changed their minds on the analysis of the support that working families need, as reflected in their recent manifesto. It will be interesting to hear the reason for that change of heart.

We introduced the working families tax credit six years ago to deal with some of the issues that the Taylor report—and, indeed, the Liberal Democrats—raised. That was the start of the necessary process of reform. We tried to ensure that work paid more than being on benefits, that take-up increased and that we gave proper support for child care costs. Today, the child tax credit and the working tax credit continue that approach and deliver the desired outcomes more effectively.

The credits also offer the chance of paying the child tax credit directly to the main carer, mainly the mother. For the first time, tax credits can be adjusted to reflect changes in the number of children in the family, working hours, child care costs or family income. That means that we can provide the greatest support to families who need it most when they need it most.

We need to acknowledge the value of tax credits and the help that they provide in people's everyday lives. Today's system replaces an inflexible and unfair approach that did little to incentivise people into work and little, if anything, to lift children out of poverty.

Despite the criticisms, support for the approach came not only from the Liberal Democrats but from the recent Citizens Advice report. Part of our disadvantage as Members of Parliament is that when we refer to such substantial documents, we cannot all read them, and they are capable of supporting different views. The first paragraph of the Citizens Advice report states:

"We firmly support tax credits as a vehicle for directing substantial extra money towards lower income families."

The Government share the organisation's ambition for the system to work effectively for all who are entitled to extra help.

Let me read part of the foreword to the health service ombudsman's report, to which the shadow Chancellor referred so freely. The third sentence of the foreword states:

"This report does not suggest that the new tax credit system is in general disarray; on the contrary it recognises that, given the scale of the undertaking, its introduction has been broadly successful".

Hon. Members might be surprised that that was the ombudsman's view, given the shadow Chancellor's deployment of selective quotations from her report.

I would not want the Chief Secretary to mislead anyone about what Citizens Advice has said. I presume that he has seen its latest briefing note to hon. Members, which states that it is misleading to claim that Citizens Advice was strongly in favour of moving to a more responsive system of tax credits and that it was concerned that overpayments would be made under the new system. Does the Chief Secretary agree?

I have not seen the document to which the hon. Gentleman refers.

It was circulated.

It was not circulated to me. I do not know whether that was deliberate or an error.

Order. I am reluctant to interrupt the proceedings. However, although I appreciate that, so far, the word "misleading" has been used for documents, I ask hon. Members to be careful about using the term when it relates to an hon. Member. I am just firing a warning shot at this stage.

Thank you very much, Mr. Speaker.

The hon. Member for Yeovil (Mr. Laws) asked me whether I agreed that the quotation that he read out from a document from Citizens Advice that I have not seen was correct. I have no way of knowing, but I trust him, and I do not think that he would read it incorrectly. So I accept that he has read it correctly, if that is the answer that he is seeking from me. He has achieved what he was seeking to achieve.

Does my right hon. Friend agree that, far from misleading the House, the shadow Chancellor made very clear his unwillingness to commit the Conservatives either to halving child poverty by the end of the decade or to continuing with the tax credit system in order to achieve that? Will my right hon. Friend confirm that the Government remain committed to halving child poverty by the end of the decade and to maintaining the tax credit system as the best way to achieve that?

I have no difficulty in agreeing with my hon. Friend on that. As he knows, that is the mainstay of our social policy. I shall explain in a moment why it is significant that the shadow Chancellor is unprepared to commit himself or his party to that objective, which might help us to understand why he is so critical of the system.

The House will be pleased to know that my right hon. Friend the Paymaster General has recently had meetings with the authors of the reports that I have just quoted, namely, the office of the ombudsman and Citizens Advice. She has also had a meeting with the adjudicator who also prepared a report. They all reiterated their support for our policy of supporting working families and children through the tax credit system.

In an economy in which people move between jobs more often, and in which their circumstances change more quickly, our challenge is to adjust child tax credits to respond to changing income patterns as quickly as possible. I should like to put that challenge into context. Three million people shift jobs each year in the United Kingdom labour market, and their income changes are often substantial. In addition, some 700,000 children are born each year, each of whom receives a rate of tax credit in accordance with their individual family circumstances. This fast-moving environment requires a balance between flexibility and certainty, while avoiding undue complexity and information overload.

That is why one of the decisions that we took at the outset—after consultation, I might say—was to set a disregard for increased income up to £2,500. Claimants do not have to tell Her Majesty's Revenue and Customs if their income rises in one year by less than £2,500 and, importantly, if their award is not affected by such a change. This allows a cushion, provides incentives and spares people who see some changes in income unnecessary paperwork. It has been suggested—I think that the hon. Member for Yeovil has encouraged the suggestion—that the disregard represents a written off overpayment. That is a bit like describing the personal tax allowance as a failure to collect income tax. It is simply not the case.

Our families need flexible support such as this to help with the demands of the modern globalised labour market. Tax credits have made a real contribution to halving child poverty by 2010, and to the successful performance of our labour markets, which are the envy of the world. Because of this contribution, those who criticise tax credits need to make clear whether they actually support the stated policy. They must make a choice between a less responsive system that cannot respond to changes in income—which admittedly would be easier to run—or the current approach, which can respond but generates greater complexity.

We still do not know whether the Opposition are supportive of working through those challenges, or whether they share our aim to lift more children—indeed, all children—out of poverty through the use of tax credits, among other things. We do not know whether they will continue to refuse to face up to the difficult decisions required to achieve that aim, or whether that is their aim at all. It is really quite simple. If they believe that the idea of tax credits is wrong, they should say so. We could then debate the positive and negative impacts of that policy along appropriate lines. If they think that tax credits are right, our purpose today should be to work constructively to improve their administration, not to undermine a programme that has benefited many people, and particularly many children.

Much of the debate so far has focused on the incidence and consequences of overpayments. We should not, however, neglect the issue of underpayments. Given that in the hundreds of thousands of such cases there has necessarily been an increase in hardship and indebtedness, will the Chief Secretary confirm that in each and every case, when people get their due, the payment of commercial interest on top will be included as a minimum and, better still, the payment of a substantial sum in compensation for distress and anxiety caused?

I cannot give the hon. Gentleman that undertaking, although I accept entirely why he should ask for it and think that that payment should be made to those who have been underpaid. Underpayments are much rarer than overpayments, however. People are much more likely to report changes in circumstances that they think will result in an increase in their tax credit than it appears that they are to do the opposite. That is why the retrospective balancing needs to be done at the end of the year. My information is that the system reacts quickly to such claims of changes in income circumstances, and that there is no necessity for us to build into it a system of compensation when the Revenue already has a compensation mechanism that can be triggered as appropriate.

I shall have a second stab at a different aspect of the issue. The Chief Secretary had a spat earlier with my hon. Friend the shadow Chancellor and the hon. Member for Yeovil (Mr. Laws) on the issue of the responsibility of the claimant to know if he or she was being overpaid. Does he agree, as he is part of the architect team for the policy, that there is a difference between someone who, by computer error, finds that he is paid £20,000 for the year rather than £2,000, and someone who is paid perhaps a few hundred pounds more? Does not he accept that it is not the responsibility of the citizen to be able to work out the complex minutiae of what goes on in the Chancellor's mind?

Order. Before the right hon. Gentleman answers, may I say to the hon. Member for Buckingham (John Bercow) that I live in hope that his stabs will become progressively shorter?

We would all be the less entertained were that the case, but that might be an objective that the hon. Gentleman would seek to achieve. The fact is that he makes an important point. I accept entirely that we ought to share an objective in terms of the administration of the system achieving his desired outcome. I will come in due course to the implementation of the proposals made by my right hon. Friend the Paymaster General on 26 May. There is a recognition that communication between the Tax Credit Office and the claimant is important, and we are taking steps to improve that. I accept that there are circumstances in which the onus ought to fall more on the Tax Credit Office than on the individual, but since the likelihood of underpayment more probably arises from a reduction in a person's income, that information is more likely to be known to the claimant than to the Tax Credit Office, and the onus ought to rest firmly on the claimant to report that change of circumstance. I am sure that he understands that this is not a straightforward matter, and that it is yet another one of the complexities that flexibility generates. We need to get to grips with those complexities if we are agreed—as I suspect that he might be—that flexibility in the system is important.

This is an opportune moment to ask the Chief Secretary about the statutory test, which we have called for, which is in the parliamentary ombudsman's report, and about which the right hon. Member for Birkenhead (Mr. Field) has tabled an early-day motion. Such a test would help to establish on what grounds money should be reclaimed when there has been an overpayment. Will he give us a clear answer now as to whether the Government will introduce a statutory test?

On the basis of our current advice, we have no intention of introducing a statutory test. If the hon. Gentleman will be patient, I shall deal with the question of appeals and how we handle overpayments in due course.

As I was saying, the problem is that we simply do not know the Conservative party's true position. More people than ever before are receiving tax credits to help with the costs of bringing up their children, but the Conservatives cannot bring themselves to support that.

The proportion of workless households with children had fallen from just over 16 per cent. in the spring of 1997 to a little over 13 per cent. by the autumn of 2004, and the lone parent employment rate rose from a little over 45 per cent. in 1997 to nearly 56 per cent. in 2004. Tax credits have played their role in helping parents move into work. There is clear evidence from respected independent commentators such as, ironically, the Institute for Fiscal Studies that our policies to make work pay have helped to boost the number of lone parents in work and, consequently, to lift a significant number of children out of poverty. How can anyone seriously seek to undermine a policy that contributes to such improvements?

I do not and will not downplay the problems that administrative difficulties have caused many people with their overpayments. On behalf of the Government, the Prime Minister has tendered an apology which I am happy to repeat. I know that this has been a difficult time for some people. The Government are determined that the tax credit system will deliver what it is meant to achieve, because it plays such a significant role in our ambition to lift the children of this country out of poverty and to continue to allow our labour markets to work as they have, to the benefit of our economy.

My right hon. Friend the Paymaster General acknowledged the challenges faced by the tax credit system in her statement to the House on 26 May—before, I should add, the publication of the reports that prompted the Opposition to table their motion. On that occasion, my right hon. Friend focused on six measures to improve the operation of the tax credit system.

First, from April 2006 a much-improved awards notice will be issued, and we will review the information that we give claimants to help them to understand the system better. It is all very well for others to say that that will take time. Of course it will. We are dealing with millions of claimants and, potentially, millions of notices, and it is best to take the time and get the system right. Secondly, from this week we are running pilot schemes, contacting customers and encouraging them to report changes. That is relevant to what was said earlier about proactive engagement with claimants. Thirdly, we intend to improve the service from the helpline. We want to stop people from being passed from one department to another, and to ensure that they are given answers within a reasonable time. Fourthly, Her Majesty's Revenue and Customs will speed up its identification of IT system problems, which will mean quicker repairs. Fifthly, we will work more closely with the voluntary sector to give more active support to the most vulnerable claimants. Finally, we will spell out more clearly how we define hardship, and we are testing options for suspension of the recovery of disputed overpayments.

In the case of one of my constituents, the payment award was correct but was withdrawn. Having contacted the helpline, my constituent was advised to contact the local Member of Parliament. I have heard of that practice anecdotally, and have been told of it by a constituent. Will the Chief Secretary confirm that that was the wrong advice, that the problem should have been resolved, and that the first point of resolution is not contacting the Member of Parliament?

I have no difficulty in agreeing that that was not the right advice. A helpline is there to help people, not to refer them to another source of help that, presumably, must then contact the helpline itself. I too am a constituency Member of Parliament.

The distinct advantage in respect of tax credit cases is that calls are recorded. That is a very helpful tool in determining the credibility and reliability of people's recollection of such calls, but it is also a helpful training tool, in that it allows us to identify those working on the helpline who perhaps need further support and training. If the hon. Member for Dundee, East (Stewart Hosie)—or any other Members who are tempted to intervene to describe examples of such behaviour—bring to my attention, or to the attention of my right hon. Friend the Paymaster General, the detailed circumstances behind such anecdotes, we can examine whether a particular helpline helper or official is giving proper advice. If they are not, we can then assist them. However, I have no difficulty in agreeing with the hon. Gentleman that the advice that was given was not appropriate in the circumstance that he described.

I return to an issue about which I twice asked the Paymaster General at Treasury questions. According to the National Association of Citizens Advice Bureaux, some helpline staff and some tax credit staff have advised people to borrow money on credit cards to meet the overpayments. Does the Chief Secretary consider that good advice?

No, I do not, and such advice should not be given, but I say to the shadow Chancellor what I said to the hon. Member for Dundee, East—if he brings to my attention the detail of such calls—[Interruption.] With due respect to the shadow Chancellor, the fact that something is in the report means nothing; it does not mean that it happened or that it is anything more than an anecdote. If it did indeed happen, it should not have, but it would help if those who have information supporting such assertions were to make it available. We have the advantage that these calls are recorded, and that the official who dealt with a particular call can therefore be identified. As a result, we can look at the circumstances of the relevant part of the conversation, and determine the advice given and whether it was properly understood by the caller. I am not disputing that the report says what it says; I am simply pointing out that if we are given the details of a particular case, we can chase it up.

Will the right hon. Gentleman reflect on what he has just said? Surely he cannot be arguing that if the parliamentary ombudsman has examined a particular constituency case and quoted the evidence emerging from his inquiries, he, as a Minister, can ignore such evidence. That cannot be right.

I hear what the right hon. Gentleman is saying, and if that is what I said I accept entirely his admonition; I should reflect on it and I will do so. I should point out in my defence that in answering the shadow Chancellor's question, I did not understand him to be saying that this assertion emanated from the ombudsman's report. I do not recall it being in that report; that said, I do not pretend to recollect the report comprehensively. However, if the facts that instruct the right hon. Gentleman's admonition are correct, I accept it and I will deal with it.

Will the Chief Secretary give way one last time?

Yes, but it will be the last time.

I am grateful to the Chief Secretary. Before he winds up his opening speech, can he clarify whether the Treasury accepts the ombudsman's second, very important recommendation, which is that the Revenue should not seek to recover an overpayment until it has decided whether the excess amount should be recovered in accordance with the code of practice? Has a decision been reached on that point?

This issue formed part of the discussion between my right hon. Friend the Paymaster General and the authors of the report. I have no difficulty in agreeing with the hon. Gentleman that that proposal should be accepted, and it will be accepted.

All of the proposals put before the House in my right hon. Friend the Paymaster General's statement of 26 May are in hand. I will say, however, that the system has been through only one full cycle. By that, I mean one cycle in which people applied for the credits, were assessed and received them and had their accounts adjusted to reflect current circumstances—in other words, only one cycle in which the flexibility of the system has been fully applied. The essence of the policy means that, across the system as a whole, there will necessarily be an element of overpayment and underpayment. As it is a system of retrospective adjustment, it shows the value of a flexible system.

Let me reassure the House that two thirds of the total overpayment figure is due to rises in family income—rises that the House should welcome as further evidence of labour market improvements and employment opportunities today. Nearly £1 billion of the overpayment—around half—is due to increases in income of more than £10,000 a year. In many such cases, Her Majesty's Revenue and Customs were notified not during the year, but at the end of the year for the reconciliation process. Clearly, our next challenge is to ensure that claimants inform us during the year of any changes to their circumstances on that scale. So while this is not a perfect system and we do want to make it work better, it is neither broken nor in chaos, as some commentators and Opposition Members may have claimed.

Is the Minister aware that people are frequently phoning the Department and being told to leave it until the end of the year? That is one of the problems. It is an administrative problem and I have considerable evidence of people being told not to supply their information, but to wait until the end of the year so that it can be sorted out then.

In some circumstances, that is appropriate advice, but only when the increase comes in underneath the £2,500 disregard; otherwise, it would not be appropriate advice. I say to my hon. Friend as I have said to other hon. Members that if he can bring the details of the individual calls to our attention, we will look into them and ensure that the training for the helpline takes such problems into account.

I wonder if I am alone in listening to this debate without knowing which of the ombudsman's 12 recommendations are not being accepted. The hon. Member for Yeovil (Mr. Laws) asked a specific question and the Minister said that he accepted that particular recommendation from the ombudsman, so will he tell us which of the recommendations are not being accepted?

We have already explained the position on complete write-off and, as I have already told the House, there is an ongoing discussion between the Paymaster General and the authors of the report. My right hon. Friend met Citizens Advice and the ombudsman separately on 5 July to discuss the recent reports. I have already referred to her statement of 26 May and said that the Revenue and Customs were taking matters forward. The Paymaster has agreed to provide a formal response to the ombudsman's recommendations and that will be issued in due course. I am not in a position to provide the House with that information today. However, the matter of complete write-off, which I understood the hon. Member for Yeovil to be raising, has already been explained.

I am grateful to the Chief Secretary for giving way again, because I do not want to conduct debate on the basis of an undertaking that proves not to be accurate. Will he confirm again whether the Government have now accepted the ombudsman's second recommendation on page 8 of the report?

If the hon. Gentleman will allow me, all the ombudsman's recommendations are currently under discussion. In due course—[Interruption.] I thought that I had already indicated to the shadow Chancellor that I was not presently minded to concede the issue.

Will the Chief Secretary give way?

I want to make some progress and take the opportunity to announce plans for providing child support through child tax credits for claimants on income support or jobseeker's allowance.

On 22 June, my right hon. Friend the Paymaster General told the House that, following her statement of 21 October 2004, she continued to keep under review the planned migration to child tax credit of those families still receiving support for children through income support and jobseeker's allowance. Since then, she has considered very carefully the reports from the ombudsman and NACAB. She has also considered the views expressed by many hon. Members, for which we are grateful.

I confirm that it remains the Government's firm intention to migrate all income-based support for children into a single, seamless stream of support, delivered through child tax credit. However, after consultation with my right hon. Friend the Secretary of State for Work and Pensions, my right hon. Friend the Paymaster General has decided that, subject to further review and consideration over coming months, the migration of the remaining families will begin during 2006. That will safeguard continuity of payment, and provide reassurance to that particular vulnerable group. Meanwhile, I again confirm that families will continue to receive the same level of financial support through their benefits as they would have received from child tax credit.

As I have already told the House, nearly 10,000 families in each constituency now benefit from tax credits. Let no one have any doubt: tax credits have brought real progress in delivering key priorities for welfare reform. They direct more help to those who need it most, they respond to significant changes in circumstances and income, and they give fairer results. We acknowledge that there have been administrative problems, but the policy is the right approach, which is aimed at tackling poverty and unemployment and helping out hard-working families.

Tax credits have made a real difference to people. That difference demands the respect of this House, and of Opposition Members.