Norman Lamb says review is a "diversionary tactic"

Government proposals which could lead to the merger of the Inland Revenue and Customs & Excise have been criticised as a "classic diversionary tactic".

A review into the two tax-gathering bodies was announced by Paymaster General Dawn Primarolo when she appeared before the Treasury Select Committee on Wednesday.

Ms Primarolo was being questioned by the committee over a series of bungles at the Revenue, a department she oversees as a Treasury minister.

But Norman Lamb, a Liberal Democrat committee member speaking to the BBC Radio 4 Today programme, accused the government of trying to deflect attention off the crises, and Conservative Shadow Chancellor Michael Howard said Ms Primarolo should resign.

Diversionary tactic

On Wednesday, Ms Primarolo gave evidence about the sale of Revenue buildings to a company based in a tax haven, problems surrounding the introduction of tax credits - and the failure to warn taxpayers that they may need to top up their pension contributions.

This is in a sense a classic diversionary tactic and takes us away from the crises in the Revenue Norman Lamb MP

She also announced a review into the Inland Revenue and Customs & Excise.

Mr Lamb welcomed the review into the Inland Revenue and Customs & Excise, which he said was "long overdue". But he added: "My concern is that this is in a sense a classic diversionary tactic and takes us away from the crises in the Revenue."

He said it was "absolutely extraordinary" that neither Revenue officials or any minister had lost their jobs over the problems.

In Wednesday's select committee hearing Ms Primarolo was accused of losing control of the Revenue.

The sale of Inland Revenue buildings, worth �370m, to a company based in a tax haven had not been directly authorised by ministers, and had been signed by an "unnamed official".

"Whilst you have ministerial responsibility you do not have ministerial knowledge," committee chairman John McFall MP told Ms Primarolo.

Mr Howard said this accusation by Mr McFall, a Labour MP, to a Labour minister, showed "quite how extraordinarily bad things have become at the Treasury."

"It is vital that the British people have faith in the Inland Revenue and Customs and Excise, the Government's tax collection agencies," he said.

Tax credits

During the select committee MPs had also questioned Ms Primarolo about the chaotic introduction of the Child Tax Credit and Working Tax Credit, which were introduced in April to help low to middle-income families.

The launch of the credits was blighted by a series of delays, leaving families increasingly frustrated and some increasingly frantic about falling further into debt.

At one stage Revenue staff were so under pressure from the stress of dealing with angry claimants, they staged a spontaneous walk-out in protest.

Inland Revenue crises Sold 600 buildings to a company based in a tax haven Tax credits launch marred by delays and computer problems People were not informed if they were facing a pensions deficit

Ms Primarolo told the committee that two million attempted calls were being made each day to the helpline.

"There's been a whole series of crises and there's been a failure at the top to keep ministers informed," Mr Lamb said.

He accused the government of keeping Sir Nicholas Montagu in charge of the Revenue as a "quite useful lightning conductor to deflect any criticism away from ministers."

"But it was the government that decided to sell off those properties, that set up the procurement terms that led to this debacle and it was the government's own plan to introduce tax credits in this way."

Merging the Revenue and Customs was "worth looking at", said Mr Lamb.

But he said: "I'm not convinced that that much saving can be achieved.

"You could end up with just a massive inefficient bureaucracy."