Overpayments 'costing £1bn a year'

Overpayments in the tax credit system are still running at over a billion pounds a year, it was revealed.

Some 1.3m families were handed too much cash in 2006-7, according to figures released by HM Revenue & Customs.

Treasury Financial Secretary Jane Kennedy insisted reforms to the system had "significantly cut" overpayments from £2.2bn the previous year.

However, critics claim the taxpayer has now lost £10bn due to fraud and error since tax credits were introduced by Gordon Brown.

Efforts to "claw back" excess payments often fail because worse-off families have already spent the money.

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