The idea
In an underhanded attempt to remove people from unemployment, new Labour massively changed how the TAx, benefits and tax credit sytems worked.
They created various different agencies (all of whome seem unable to communicate between themselves) to deal with each individual aspect of our tax, benefits tax credits etc.
This obviously created millions of jobs, which looked like they were taking people out of unemployment, at the time.
Now we're a few years down the line, it's pretty obvious that not only are we as a Country having trouble affording all these departments and jobs in the public sector, but it's also extremely confusing/frustrating and plain difficult to arrange anything with these various agencies.
The Tax credit people don't know how much you earn, the benefits agency doesn't know how much tax credit's you're getting and the HMRC, well they couldn't care less as long as they get their pound of flesh.
What was wrong with working it all out through your tax code? One organization who deals with your income tax, credits and benefits all based on a circumstance relative tax code?
low income and young children? – high tax free earnings allowance (tax code).
high income, no kids – low tax free earnings allowance (tax code)
Sure we'll need to lay off a lot of unneccesary public sector workers, but they really shouldn't have been employed in the first place, it was all a "trick" to bring the unemployment figure down, a trick we can't afford to support any longer.
Why is it important?
Because not only is the current system BLOATED, confusing and incapable of communicating within it's various departments, the Country can clearly not afford it.