Councils across the country have told the government they may be overpaying housing benefit because claimants have not been able to say how much - if any - income they receive from tax credits. Some families could even be asked to repay housing benefit. Local authorities are out of pocket because the government has refused to increase council funding to cover the cost of the extra payments.
Thousands of other people could be missing out on housing benefit because their tax credits are based on out-of-date information. In some cases their income has fallen since the initial assessments were made.
Documents seen by the newspaper show the government was warned earlier this year that the launch of tax credits could cause serious problems for local authorities if claims and payments were not sorted out in good time. In March, Robin Wales, chairman of the Association of London Government, wrote to the Treasury warning: 'I am writing to highlight London boroughs' serious concerns about the impact delays in assessing new tax credit claims will have on families in London.'
Last month, paymaster general Dawn Primarola was forced to apologise to MPs after admitting 800,000 families had not yet received the tax credits they had claimed- but she said all claims made before 25 April had now been paid. However, Mr Willetts attacked the government for failing to put in place contingency plans in case the scheme's launch ran into trouble.