The following statement was published on the UK Parliaments website 2 July 2013.

Please note that the tax gap referred to in Margaret Hodge’s remarks is the difference between tax due and tax collected.

A statement from The Rt Hon Margaret Hodge MP, Chair of the Committee of Public Accounts:

These accounts give us a mixed picture. One of the most startling figures is the tax gap for VAT, which HMRC estimates at £9.6 billion. That is a huge amount of money – 10% of the VAT that should be collected and a third of the overall tax gap. Yet despite some progress, HMRC still does not comprehensively check all VAT returns and its response to the emerging threat from online trading has been far too slow.

I welcome the progress HMRC is making in tackling fraud and error in the tax credit system, but with £2 billion in overpayments last year it still has a long way to go.  And the personal tax credit debt balance is going up, not down. It now stands at £4.8bn, over £1bn greater than the target HMRC hopes to meet by the end of March 2015.

HMRC met its target to operate a normal PAYE service by March 2013, following previous problems. But it had to forego £953.3 million of tax in the process and there remain questions about its capacity to handle in year changes to taxpayer records. I also have concerns about HMRC’s real time information system (RTI), which has been rolled out before being fully tested. HMRC has chosen not to add in contingency for significant extra costs or measures to deal with major technical failure. This is worrying as the current cost of RTI is already expected to be £115.5m more than originally planned. HMRC is leaving itself exposed, which could be a real concern for DWP as Universal Credit relies on RTI.

HMRC is responsible for collecting all the tax due. It must do more to crack down on tax avoidance. And it needs to put taxpayers – the customer – at the heart of its services.

 British cosmologist and astrophysicist Martin Rees has been charged with identifying a modern day Longitude Prize – this was set by the British Government in 1714 and promised £20,000 to the person who mastered the challenge of calculating longitude at sea. At the recent G8 conference Cameron is quoted as saying:

“What the world needs most of all right now is growth, and that growth in my view is going to come from small businesses and start-up businesses, more than from the big existing traditional businesses, so the whole agenda of innovation and entrepreneurship is absolutely vital,”

He added:

“There are so many problems in our world that need that amazing solutions – whether it is a cure for dementia, solving the problem of diabetes, having a flight from Britain to New York that's carbon-free… Let's challenge the public and challenge the scientist for which is the great problem we want to crack. I think it's an exciting idea and another example of Britain leading in innovation.”

The competition is open to everyone from individual citizens to academics and businesses. Any ideas?

The appointment of Mark Carney as the new governor of the Bank of England has received guarded approval from the financial press this week who hope that he will take a more active role in stimulating the UK economy.

The Bank of England interest rate setting committee is meeting Thursday this week and is expected to reject any further boost to quantitative easing beyond its current level of £375bn.

The BoE's figures show that RBS and Lloyds have reduced the amount of money they lend to households and businesses, while Barclays has threatened to cut back following demands from the main City regulator that it must bolster its reserves. The Co-op, which recently abandoned its planned take-over of 600 Lloyds-TSB branches, is in trouble after discovering a large shortfall in its capital reserves.

The funding for lending scheme designed to cut the cost of borrowing has pushed down the cost of mortgages since it was launched last year, but unfortunately has made little difference to the level business lending.

A leading think-tank has called on Mark Carney to bypass the main banks with a direct intervention into the housing industry to support the building of 60,000 homes. The New Economics Foundation has said that instead of using quantitative easing to buy government bonds, the BoE should buy assets that will directly support the economy, which would mean purchasing bonds to support home building and energy efficiency, infrastructure projects and small business lending.

It will be interesting to see if the new broom sweeps clean and wakes up the Old Lady of Threadneedle Street, or, continues to brush these innovative ideas under the carpet!