Tax credits should be abolished

The central member of a gang who stole more than £3m of tax credits has been jailed for five years, following an international investigation by HMRC.

Tax credits are wide open to fraud.

Lithuanian Ricardas Virokaitis was the linchpin of a gang who paid Eastern European women to come to the UK solely to register for benefits and tax credits. Virokaitis and his criminal colleagues escorted the women while they gained the necessary documentation to claim the fraudulent benefits. The women then returned to their home country and the gang accessed their payments via bogus bank accounts. Virokaitis deliberately recruited women with children in order to maximise the amounts paid to each account.

More than 100 women were fraudulently registered for benefits and tax credits. This enabled Virokaitis’s gang to steal over £3 million in bogus tax credit and benefit payments. Before he was arrested Virokaitis was withdrawing up to £90,000 every month from these bogus accounts.

Virokaitis was arrested in September 2010 at Stansted airport, whilst attempting to flee the country on a flight to Lithuania. HMRC officers uncovered a safe house used by the gang in South East London, where they found 93 bank cards and false identity documents hidden under the floorboards.

Back in March 2006 (says Chris Mullin in his diaries) Alan Milburn was suggesting that Labour needed to scrap tax credits and instead reduce taxes for the poorest: "Tax credits are based on the belief that the state can micro-manage people's lives - and it can't."

"A fundamental philosophical difference between yourself and Gordon", said I.

The great meddler, with his famous lack of empathy, set up this cumbersome, centralised system, wide open to fraud, knowing best, rejecting the offer of help from the DWP.

This part of his legacy will probably survive, only because the coalition is too timid to do what it should. Their philosophy should be that set out by Alan Milburn back then. Cheaper to set the people free.

But how much more agreeable to take their money away and then give it back to them after they have filled out your forms and jumped through your hoops.

The timidity of the coalition will entrench this controlling, fraud prone mammoth in our system of government.