Concentrix

Kate Green Excerpts

Wednesday 26th October 2016 Commons Chamber

[Rebecca Long Bailey]

My hon. Friend’s intervention highlights the human impact of these contractual failings. My constituents have asked me for the addresses of food banks and whether parcels could be delivered to them because they were too ashamed to be seen as struggling by their communities. To put people in such situations is an absolute disgrace.

Total savings of £284.1 million have been made since the commencement of the contract in November 2014. Anyone can see that the leap from £2.3 million in 2014 to £159.5 million by mid-August 2016 is excessive. Does the Minister therefore believe that there was simply a massive increase in fraud in the system, or does she agree that the contract was granted in the absence of a firm evidence base to justify the risks associated with an agreement based on payment by results?

As I said, there is a human impact and a human cost; it is not simply a case of slapping Concentrix on the back of the hand and saying, “Let’s all move on.” We are talking about the Government’s duty to preserve justice being abandoned as a result of the profit motive established by the contract. The risks were real human risks—families being forced into destitution, anguish and despair, with all the associated pressures on an individual’s mental health.

Earlier this year, the Social Security Advisory Committee noted that the payment model could create a conflict of interest. It recommended that the National Audit Office should examine the contract to ensure that it included appropriate safeguards to preserve justice for the claimant. At that stage, there was no investigation, but the Labour party has since written to the NAO and received the following response:

“My team has carried out some preliminary work to look into the issues. Their view is that the contract between HMRC and Concentrix merits further investigation.”

I am pleased that the NAO will investigate, but the Government must carry out a full and transparent inquiry of their own. Our motion calls on the Government to conduct a comprehensive investigation into the performance of Concentrix and HMRC’s contract with the company, in terms of both the adequacy of enforcing all the contractual terms, and the suitability of a payment-by-results model for delivering such a service. I would add that the NAO confirmed last year that the Government’s payment-by-results schemes accounted for at least £15 billion of public spending. It has stated that neither the Cabinet Office nor the Treasury monitors how payment by results operates across government.

[Kate Green (Stretford and Urmston) (Lab)]

My hon. Friend is making a detailed case about the defects of the contract, including in relation to payment by results. Does she agree that the problems with that model were exacerbated by the fact that when people had a problem with their tax credits being withdrawn, they had to complain to Concentrix—they had to go back to the decision maker—and there was, naturally, no financial incentive for Concentrix to unwind a wrong decision?

[Rebecca Long Bailey]

My hon. Friend is right. Sadly, however, when many people tried to complain to Concentrix, all they received was a dull engaged tone, so they did not get very far.

Will the Minister assure the House that she will go beyond the scope of the motion and investigate such contracts more widely? She should consider putting measures before the House that will prevent the incorrect application of payment by results. I fear that Concentrix is just the tip of the iceberg.

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[Jane Ellison]

It is important to recognise that when a case is resolved, it means that a conclusion has been reached based on the facts. I cannot give the House the breakdown of cases in which payments have been reinstated, cases in which there was in fact an error in the claim that had to be corrected, or indeed cases—a very small number of them—in which claims were fraudulent. The point is that the cases have been resolved according to the facts provided and in the knowledge of the person concerned. We may be able to provide a breakdown at some point, but I am not in a position to do so today.

[Kate Green]

The House would find it especially helpful to know to what degree Concentrix was steered by the Government towards looking for undeclared partners, and to what degree the contract incentivised Concentrix to jump to conclusions?

[Jane Ellison]

I will come on to that.

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[Kate Green (Stretford and Urmston) (Lab)]

It is a pleasure to speak in this debate and follow the hon. Member for Torbay (Kevin Foster). It is very useful to have the Minister’s detailed and constructive responses on the operation of the contract, but I want to open my remarks by drawing attention to the policy issues that underlie the difficulty we have got into.

For many years we had a social security system designed and operated in a way that served to target, judge and stigmatise single parents in particular. I thought we had stopped doing that, but certainly as far as the experiences of my own constituents are concerned that group of claimants has been particularly affected by the way this contract has been designed and operated.

Of course, single parents will in most cases, although not always, be women—women who take responsibility for raising their children alone. There is a real question for Ministers to answer about the policy design that led to that group of women being so damaged and targeted by the operation of the contract. When I raised this point with the Minister earlier, she did not really address it, but I hope the NAO report will look at it—not just at the way the contract operated, but at how it was designed and what behaviour it incentivised.

I agree with the Minister and the hon. Member for Torbay that nobody condones fraud in the benefit system—it undermines confidence in the system and denies access to the system for those entitled to benefit from it—but when the system starts to make assumptions about intimate relationships and living arrangements, which are intrinsically intrusive matters, it is incumbent on the Government and their agents to handle that with great sensitivity and care. It seems pretty clear from all we have heard about the operation of this contract that Concentrix did not bother to do that. Instead, perhaps steered by Ministers or perhaps because of the payment-by-results model—about which the Social Security Advisory Committee warned of dangers early on—Concentrix appears to have taken the flimsiest of evidence at face value to determine that people must be living with undisclosed partners. In many cases, such as those of some of my constituents, without any further meaningful inquiry their tax credits would then be stopped.

[Sammy Wilson]

While Members have rightly identified the incentivisation issue, does the hon. Lady accept that Concentrix acted on only a fifth of the 1.5 million cases sent to it by HMRC, and that in the mandatory review it reviewed 95% positively? That militates against the incentivisation argument. In addition, when cases went to appeal, fewer than 0.005% were overturned, which would indicate that Concentrix was well aware that it had to abide by certain rules in dealing with these cases.

[Kate Green]

Assuming that there might be fraud in a fifth of cases and looking into them is a very high proportion, because we know, and the Minister acknowledged, that fraud in the social security system is very low. I am not sure I completely accept the hon. Gentleman’s analysis, therefore. I have concerns—and the whole House has expressed concerns about this in this debate, as has the SSAC and the NAO—that a payment-by-results model has to be designed very carefully if perverse incentives are to be avoided. In this instance that was not achieved.

As a result, constituents of mine and of Members across the House were put in the impossible position of having to prove a negative—to prove that they did not live with somebody, often somebody they did not know, and sometimes someone who did not even exist. Cases that I have seen include: a woman being asked about an undisclosed partner who turned out to be a previous tenant of the property who had moved out nine years earlier; a constituent who was accused of living with a previous tenant’s son; a constituent who was told that her landlord was in fact her undisclosed partner; and, in perhaps the most bizarre case of all, a constituent who appeared to have been told that her mother, with whom she lived, was her undisclosed partner.

Evidence that was provided to Concentrix by my constituents was too often ignored. Sometimes Concentrix had given the wrong address for the evidence to be sent to, or, as the hon. Member for Torbay mentioned, the letters did not look very convincing. One constituent drew my attention to the fact that many of the words were misspelled and that the letters were full of errors. She drew the overall conclusion, when Concentrix got in touch with her, that she was in fact the victim of some sort of scam. Sometimes evidence could not be produced. In two cases that I have dealt with, constituents were asked to submit utility bills, even though they were living with their parents and the utility bills were not in their name. We have also heard that when constituents have tried to deal with Concentrix on the telephone to explain their circumstances, they repeatedly received poor customer service or were unable to get through.

I consider it troubling that, even when there was clear evidence of Concentrix being in error, my constituents were told that they would have to go through a formal process of mandatory reconsideration—an extra barrier—when in fact Concentrix should immediately have said, “We have made a mistake, we will get the situation put right.” The Minister has told us of the commitment to get tax credits into payment within four days of an investigation being concluded. Of course I understand that time needs to be taken to look into the circumstances of a claim, but we need an overall time limit for these investigations. We cannot leave constituents waiting for weeks and weeks without these matters being resolved.

The consequences for all our constituents have been extremely harsh. Housing benefits have been stopped. In one case, I had to intervene to prevent a constituent from being threatened with eviction. Debt has been mounting. We have heard about women being forced to go to food banks for the first time. One mother in my constituency who was unable to pay her nursery fees was told to remove her child from the nursery. In another case, children have had to be sent away to live with relatives because the mother was no longer able to feed them or to heat their home.

Another policy point to which I draw the Minister’s attention relates to how especially damaging this contract has been in terms of its impact on children. The Government really have to face up to the fact that policies and their execution must be underpinned by an obligation to prioritise the wellbeing of children. In this contract, that clearly did not happen. It is iniquitous that the brunt of this chaos should have been borne by women and children. An equality impact assessment of the policy and its execution ought to have addressed that fact, but the Minister did not mention that this afternoon, and the Economic Secretary to the Treasury, the hon. Member for Brighton, Kemptown (Simon Kirby) did not mention it in the Westminster Hall debate last week either. I really hope that, in summing up the debate this afternoon, the Minister will tell us what equality impact assessment was carried out, and what adjustments were made to the policy as a result.

This has been a disgraceful catalogue of error and mistreatment. I am pleased that the contract has been terminated, and I am very pleased that the National Audit Office is to carry out a full review of what went wrong. I echo the questions asked by colleagues around the House. What compensation is going to be paid to our constituents who have borne the brunt of the erroneous management of the contract? What penalties will be imposed on Concentrix? What has been the overall cost to the taxpayer of the mismanagement of the contract, including the cost of the spike in appeals?

I echo the concern that it is at best philosophically inappropriate for intrusive inquiries into people’s personal circumstances to be carried out for commercial gain and rewarded by results. I ask the Minister to review whether it is appropriate to put someone through the formal mandatory reconsideration process when a simple error has been made by the contracting company and when dealing with the error there and then would have been a fairer and more effective way to proceed.

I am grateful to the Minister for saying that her fundamental thrust is to look at what lessons can be learned overall. Will she undertake to return to the House to report on those lessons and tell us how she intends to apply the learning that has been gained?

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[Simon Kirby]

I will keep going, if I may.

The hon. Member for Stretford and Urmston also asked whether the contract unfairly discriminated against women. It is important to note that as of April 2016, 88% of single claims were made by women, and 80% of single claims sent to Concentrix to check with regard to high-risk renewal were from women. I recognise this—

[Kate Green]

Will the Minister give way?

[Simon Kirby]

I will not—I have to respond to a lot of people.

I recognise that sensitivity is needed on tax credit claims and that claimants should be treated with dignity and respect. The hon. Lady also asked about penalties. The figures that will and have been deducted from payments, and the detailed calculations, cannot be disclosed at this point as they are commercially sensitive, but the amounts will be fair and appropriate.

The hon. Member for Salford and Eccles (Rebecca Long Bailey) said that Concentrix was getting a rap on the knuckles. I point out that it is actually losing the contract.

My hon. Friends the Members for Torbay (Kevin Foster) and for Gloucester (Richard Graham) made particularly thoughtful and considered contributions. They have obviously given the matter great thought.

The hon. Member for Ayr, Carrick and Cumnock (Corri Wilson) asked whether the contract was ended only because of poor call handling. That was not the case. The poor call handling had an impact on customers and resulted directly in tax credits being stopped. She also mentioned the downsizing of HMRC. An extra £800 million has been announced for HMRC. Using a private company in this way offered a cost-effective method of reaching a large number of people.

The hon. Member for Cardiff South and Penarth (Stephen Doughty) asked whether this situation spelled the end for outsourcing. This is about cutting down on errors and some fraud, but HMRC will evaluate each case on its merits to deliver value for money for the taxpayer. It is fair to say that the lessons learned from this situation will help to inform future contracts.