There’s more than a little of the piscine about the fact that our Conservative-led has set debt collection agencies onto poor families who have been overpaid tax credit due to errors made by HM Revenue and Customs.
Firstly, the move undermines the principle behind the tax credit system – that it is there to ensure that poorly-paid families may still enjoy a reasonable living standard. Tax credits are paid on an estimate of a person’s – or family’s – income over a tax year and the last Labour government, knowing that small variances could cause problems for Britain’s poorest, set a wide buffer of £25,000 before households had to pay anything back.
By cutting this buffer back to £5,000, the Conservatives have turned this safety net into a trap. Suddenly the tiniest overpayment can push households into a debt spiral, because their low incomes mean it is impossible to pay back what the government has arbitrarily decided they now owe.
And the sharks are circling. Instead of collecting the debt on its own behalf, HMRC has sold it on to around a dozen debt collection agencies who are harassing the families involved with constant telephone calls, mobile phone messages and letters to their homes.
In total, HMRC made 215,144 referrals to debt collectors in 2013-14. Of the working families involved, 118,000 earned less than £5,000 per year.
This takes us to our second area of concern. Remember how the Department for Work and Pensions has been encouraging people – particularly the disabled – to declare themselves as self-employed in order to avoid the hassle and harassment that now go hand in hand with any benefit claim? You know – the refusal of benefits based on arbitrary ‘descriptors’ that were originally devised by a criminal insurance company as a means to minimise payouts, and the constant threat of sanctions that would cut off access to benefits for up to three years unless claimants manage to clear increasingly difficult obstacles.
And do you remember how the DWP reported earlier this year that more than 3,000 people who were subjected to the government’s benefit cap have now found work? This blog suggested at the time that many of them may have been encouraged to declare themselves self-employed in order to escape the hardship that the cap would cause them.
Both of these circumstances are likely to lead to a verdict of overpayment by HMRC, as the self-employment reported by these people is likely to be fictional, or to provide less than required by the rules – either in terms of hours worked or income earned.
Suddenly their debt is sold to a collection agency and they are suffering government-sponsored harassment, alarm and distress (which is in fact illegal) far beyond anything they received from the DWP; debt collection agencies are not part of the government and, as Dame Anne Begg pointed out in the Independent article on this subject, “The tactics they use to collect the debt are not tactics a government should use.”
Maybe not. So why employ such tactics?
Let’s move on to our third, and final, worry. By setting sharks on the hundreds of thousands of minnows caught in the government’s trawler-net (that was formerly a safety net – and I apologise for the mixed metaphor), the Tory-led administration is creating a handy distraction from the huge, bloated, offshore-banking whales who donate heavily into Conservative Party funds and who are therefore never likely to be pursued for the billions of pounds in unpaid taxes that they owe.
The government has promised to clamp down on tax evasion and avoidance, but ministers would have to be out of their minds to attack the bankers and businesspeople who pay for their bread and butter.
George Osborne suffered huge – and entirely justified – derision last year when HMRC published a list of its top 10 tax dodgers, which revealed that public enemy number one was a hairdresser from Liverpool who had failed to pay a total of £17,000.
It seems likely that the Conservatives have decided that future announcements will involve the reclamation of far larger amounts, and from far more people…
Innocent people who were either cheated by Tory-instigated changes to the system or by Tory-instigated misleading benefit advice.
Meanwhile the guilty parties continue to go unhindered. Their only payouts will continue to be made to – who was it again?
To the Conservative Party.
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Its quite obvious what is going on here.
The commodification of the poor.
In other words, poor people are now something that can be traded on ‘markets’ along with junk bonds and dodgy mortgages
Some bright spark (probably in the Treasury) has taken a leaf from the Goldman Sachs book of moral turpitude, and turned poor people, as whole [bear with me on this] from being a ‘drain on finances’ into an ‘asset they can flog off to whoever is willing to try and make a few quid from them.
Of course, poor people are not a drain, all people are an asset to the places they live.
But the perception that they may be has been at the core of Malthusian and Benthamite thinking since the 1790’s. Hence the ‘New Poor Law’, Workhouses, Workfare and flogging off the NHS database to whoever will buy it.
The unemployed have already been ‘sold’ to the likes of AlforEmma, the tossers and Spurious corp. Now it is the turn of ‘the working poor’, with the fiddling of the tax credit limits.
Burns spoke of Scots being:
“Bought and sold
For English gold’
Perhaps he would not mind were I to suggest that the coalition’s epitaph might be:
“We are bought and sold
For anyone’s gold
Such baggages, such rogues
Gouge our nations”
That would be the ‘huge, bloated, offshore banking whales’ who also own the media, which is probably why we hear so little of them.
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I also have debt with Tax credits, i received a letter saying i owe them £997 and i must pay it back. This is not the only letter i got, i got letter from council saying i had an overpayment of £1,500 in rent and i owe council tax for the amount of £616, so i am left paying all this debt plus rent council tax in my new home. I received a rebate twice from council tax saying i paid too much, one was for £98 then the second was for £100 then to get a letter after i had moved saying i owe £616 is ridicules. So someone made the same mistake twice leaving me to pay for their mistake. They know all your income etc but yet we are punished for their mistakes. I am beginning to wonder if i owe any of this money they say i do because you get no explanation even though you ask for one. So now i am left with all this debt i never had before and struggle to pay this debt plus all the council tax and rent i have to pay in my new home. I was debt free but not now they have pushed me into debt, its disgusting that they can get away with this, should it not be them that is penalized for making these mistakes not once but twice. I work 30hrs a week and have to pay just short of £25 a week council tax and £56 a week rent and i am on minimum wage, plus the council tax and rent from old house.
I suggest you go down to the council and get everything in writing then see someone at Citizens Advice or a Law Center. Councils are known and have form for demanding money that is not theirs. Fight it and you will win.
Councils don’t have anything to do with tax credit overpayments but the advice is sound with regard to HMRC as well.
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I would hazard a guess, that many of the MPs of all parties, but particularly the LibDems & Tories who are those with inherited wealth, would be also using such systems to avoid/evade tax. Wasn’t it Cameron whose father actually made some of their pile from this industry? Turkey & Christmas come to mind.
The attack of the poorest via debt collection is as Jess says a commoditisation of the poor. This must be seen as part of the entire raft of anti-poor, and poverty-creating policies that have through workfare taken even the value of their own labour away from the poor and made them into traded commodities for their buddies to use and profit from. Debt collection – and the sale of debt to collectors – is another turn of the screw to frighten and put off people from actually claiming benefits such as tax credits, just like the bedroom tax has frightened people so they turn down accommodation in case their circumstances change and they will be charged. Ditto the appalling treatment of the disabled, and the unemployed through the myriad measures of the DWP..
This a national disgrace, as often the repressive and bullying measures (such as the Work Programme, HB, and WCA, PIP) cost more than the benefits of those treated like this. It’s a national scandal that even after four years, more ways to batter the poor to feed the unending demand for upwards moving money to the 1% are being exploited. The deaths and breakdowns this will force on the persecuted will, of course, be seen by Cameron, Clegg, Osborne and Alexander and Cable as justifiable collateral damage, and even as beneficial further cost reductions.
Disgusting, immoral, and evil.
Creating the fear of claiming a benefit: I remember discussing that problem at college, and how it led to atrocious suffering during the American Depression of the first part of the 20th century, and how resolving that was one of the top things FDR had to address. I also remember reading about it in Angela’s Ashes, and how it encouraged families into extreme deprivation that was harmful to their very life chances.
Increasingly I am suspicious: the people most at risk of falling into this trap are the self employed, whose wages are paid not by annual agreement, but by how many calls they get offering work. I have some experience of this with my husband, and how those already established in a field view the newcomers (even those completely out of their area), as infringing on their basic right to own an entire market and speciality. Given that both Tories and UKIP are the parties of this attitude, it seems logical that there are links in this policy.
Pull up the ladder boys: make the rich secure and the poor poorer.
(It’s also irrefutable prrof that there is no intention to promote work in reality, as I well remember having to refuse overtime I would have liked in the fear it would cause a tax credit overpayment).
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