In Tax Credits: One Year On, a review of the scheme introduced in April 2003, author Marylin Howard says that there is still need for further reform if tax credits are to succeed as part of the Government's pledge to end child poverty by 2020.
The report draws on case studies from welfare rights advisers across the UK. It looks at wider issues including childcare, income assessments, overpayments and the relationship with other benefits, and makes policy recommendations.
The charity is calling for the geographical range of children's centres to be extended. It says that nearly half of poor families live outside the 20 per cent most deprived areas where centres are sited. CPAG also wants more 'formal childcare' and early years provision, particularly for the under-threes, and this should be provided free or at a reduced cost for poorer families.
CPAG chief executive Kate Green said, 'There remains too much confusion among claimants. While of course we welcomed the additional resources provided by the new system last year and have been pleased with the impact it has had for many low-income families, the system remains riddled with problems that are not being addressed.'
The scheme is so complicated that many parents do not understand it, she added.
'There are also problems with overpayments where claimants are being paid incorrect amounts through no fault of their own - and then having money taken off them and their children.'
The report found that the Inland Revenue's 'stringent approach' to overpayments and their system of recovery through deductions from tax credit payments, even when the error was not the claimant's fault, had led to financial hardship for the poorest families. CPAG is continuing to lobby for an amnesty for people who have received overpayments.
The charity says it is too early to know whether recent increases to the per-child element of the child tax credit will help the Government meet its child poverty income targets, as some commentators have suggested.
'Its adequacy in meeting the needs of children depends on take-up being high and meeting more, if not all, of the costs of children in poorer families. We do not yet have enough evidence.'
But the CPAG concludes that 'there is good reason to suppose' that child tax credits 'will have further reduced the numbers of children in poverty'.
