Paymaster General Dawn Primarolo has written to ombudsman Ann Abrahams indicating that she intends to try to get back 1.9bn in overpayments. Those who can prove they could not have 'reasonably' been expected to recognise an error will not be pressed for repayment.
In a damning report earlier this year the ombudsman had argued that writing off repayments caused by errors in the first two years 'would be a sensible and proportionate response to the situation and would give much needed relief to people who have been caused considerable distress and hardship'.
The impact of the policy has already been felt by nurseries where parents facing demands for repayments have reduced the hours their children spend in childcare. Nursery owners are also reporting rising levels of non-payment, with parents citing the tax credit fiasco as a reason for them not having money.
Carol Leech, who runs the Buckingham day nursery in Leek, Staffordshire, said that 'one or two' parents had cut their use of the nursery by a day a week. She added that the tax credit crisis underlined the justice of the case put by childcare providers for state subsidies to be paid direct to them.
'The mechanism is already there with the nursery education grant,' she said. 'I remember a Government minister telling us at a conference that the reason she would not do that was because it would be subject to misuse by providers. But now it's a problem all over the country where people are refusing to pay their nursery bills when they are often getting 70 per cent of it paid by the state.'
Purnima Tanuku, chief executive of NDNA, said, 'The Government should take responsibility for the fact that these overpayments have been made.'
To ask parents to repay money could put many families, particularly those on low incomes, into a very difficult financial situation. It could also mean they are unable to afford the childcare that tax credits are supposed to support.'
Sarah Whiteside, who owns Chethams nursery in Bury, said that she had encountered a number of cases where parents had received the childcare element of the working families tax credit and had then withdrawn their children from the nursery without paying outstanding fees.
