Working Tax Credit - Implementation Difficulties

Implementation Difficulties

The introduction of the Working Tax Credit scheme was marred by implementation issues and large scale overpayments. The Office of National Statistics estimated that of the £13.5bn paid out in tax credits in 2004, £1.9bn consisted of overpayments. In addition, computer problems led to delays in many receiving payments, causing significant financial hardship for those on low incomes, and resulting in EDS losing its contract to provide the Inland Revenue with computer services.

These problems led to considerable political fallout. Dawn Primarolo, who as Paymaster General was the minister responsible for the implementation of tax credits, having to apologise to parliament and being asked whether she had "lost control" of her department. Prime Minister Tony Blair also apologised to Parliament over the incident.