Concentrix

Louise Haigh Excerpts

Wednesday 26th October 2016 Commons Chamber

[Rebecca Long Bailey]

I completely agree with my hon. Friend. It is hard to believe that the number of fraudulent tax credit claimants suddenly increased so dramatically in those two years. What is clear, however, is that there is an ever-growing evidence base suggesting that Concentrix has been unfairly and unjustly stopping people’s tax credits, leaving them in financial difficulty, along with the anxiety that that causes.

I am pleased that the Government have accepted that the contract was not working. Indeed, they were forced to concede that point in an answer to a parliamentary question asked by my hon. Friend the Member for Sheffield, Heeley early last month. The response revealed:

“Since mid-October 2015 there has been 120 instances where Concentrix has not fully met the performance standards set out in the contract out of a total of 1625.”

Following mounting pressure from Opposition Members, the Government announced that they would not renew the Concentrix contract when it ends in May, and that they would redeploy 150 members of Her Majesty’s Revenue and Customs to clear the backlog of cases.

[Louise Haigh (Sheffield, Heeley) (Lab)]

My hon. Friend is making a powerful case. Is she aware that it was not actually until October last year that the Government started monitoring the performance of Concentrix, as was revealed to me in a parliamentary answer just a couple of weeks ago? That shows exactly why they have removed the contract now, because before that they did not even know whether Concentrix was performing the service standards laid out in it.

[Rebecca Long Bailey]

My hon. Friend makes a fantastic point. A whole section of my speech is devoted to particular clauses in the contract that may or may not have been enforced by HMRC and the Government. I will come on to that in due course.

Labour welcomed the announcement that 150 members of staff would be redeployed and that the contract would not be renewed, but we still had serious concerns that Concentrix would continue to handle cases and that the Government had not stated that they would bring the operation back in-house. Following further pressure from Labour and the Public and Commercial Services Union, the Government backed down and PCS confirmed last week that the operation will, indeed, be brought back in-house, with Concentrix staff in Belfast being transferred to HMRC.

We of course welcomed that action, but it does not even begin to address the wider issues. How did this situation arise? When did the Government first become aware of it? What action did they take? How will they ensure that it does not occur again? Most importantly, when and how will the victims be compensated? Media reports were surfacing as far back as 2015 in relation to erroneous tax credit decisions pursuant to the contract, and, as I have outlined, the figures indicated an unusual spike in appeals. The red flags were there and they should have been acted on.

I would like to direct the Minister to the contract between HMRC and Concentrix, which provided a number of tools that the Government had at their fingertips. Section I3.1 of the contract provides that where HMRC is concerned with the delivery of service, it can investigate. Was HMRC concerned, and if so, when? If the Minister cannot answer just yet, I will, to help her to pinpoint the information, illustrate further machinery in the contract that would have helped the Government and HMRC to find out about any problems pretty swiftly. Section E7.1 and schedule D provide for reviews of the contract’s effectiveness. Schedule D4.1 states that “prior to…Go Live”, HMRC would work with Concentrix to establish and agree a “robust Governance Framework” including contract management, communications, quality and assurance, payment risk management, performance management, change control and, most importantly, reporting. Will the Minister confirm the details of that “robust Governance Framework” for the benefit of the House?

If the Minister cannot do so, I can reassure her that fall-back options were still available. Schedule D12.1 states that HMRC would have full access to individual cases and, further, that Concentrix was under an obligation to let HMRC observe its working methods. Pursuant to that provision, were individual cases reviewed by HMRC, and did HMRC investigate the methods used by Concentrix? If so, how often did that happen and what were the findings of those investigations? It is clear that the Government had the tools that they needed to monitor service delivery, but perhaps they simply did not use them. The Minister will confirm in due course.

If the Government had found failings after exhausting the quite reasonable dispute process in the contract, they could have exercised the break clause found at section G3 by giving only three months’ notice. Will the Minister confirm whether and when that was considered, and tell us the outcome of that consideration? If, however, her answer to all my contractual questions is, “I don’t know,” I would ask whether she is really sure that HMRC had the capacity to monitor the contract effectively. She will be interested to know that PCS is due to publish a report on HMRC shortly, which suggests that

“the department is at breaking point…staff are hugely demoralised, 25% want to leave the department immediately or within a year and the department scores below average in all of the measures on the Civil Service’s annual staff survey.”

The report does not paint a happy picture.

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[Jane Ellison]

Of course it is not acceptable—not at all. I would add that, as hon. Members may be aware, the opening hours of the MPs’ phone line have for some weeks been extended to cope with the larger number of calls coming through that route.

[Louise Haigh]

In her response to that urgent question, the Minister reassured the House that queries would be dealt with within four working days. We know that that simply is not the case, and many of my constituents have been waiting for weeks to hear back from Concentrix or HMRC about their tax credit award. Will she update the House about the deadline for dealing with these cases?

[Jane Ellison]

I will come on to that, but the hon. Lady has provided me with an apt moment to be clear about what I said on that day. I said that once we had established the facts of the case, people should be paid within four working days. Clearly, some cases are complex and need further details to be provided. In response to the urgent question, I said that once we had established the facts, an automated process would authorise payment to be made within four working days. That is the timeline to which HMRC is working.

As I have said, it is absolutely critical that we get the right information, establish the facts and get payments started again. To that end, HMRC took back from Concentrix 181,000 incomplete cases, and staff have been working hard to resolve them. I can update the House by saying that 178,000 of the 181,000 cases have already been finalised, which represents 98% of them. HMRC has already written to the people concerned in the other 2% of cases, and it should conclude those cases by the end of this month. I want to place on the record my thanks to HMRC staff for their efforts in that regard. HMRC staff are also taking on reviews that are requested of any decision made by Concentrix.

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[Jane Ellison]

That is exactly right, and today’s debate is timely as it allows us to focus on that. I am now going to give way to the hon. Member for Sheffield, Heeley (Louise Haigh), who has done so much work on this matter.

[Louise Haigh]

I am grateful to the Minister for giving way—she is being very generous. As we have heard, the contract altered last year. Will she confirm how the contract was altered last October, and that it was altered because Concentrix was unable to make enough money out of it before then?

[Jane Ellison]

If the hon. Lady will forgive me, I will write to her on that. As commercial discussions are ongoing it would be best to write on something as detailed as that, and I am happy to do so.

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[Louise Haigh (Sheffield, Heeley) (Lab)]

We are extremely hopeful that this sorry state of affairs marks the beginning of the end of payment by results in our welfare system. It has no place there, it creates perverse outcomes, and it has ruined the lives of thousands of people. Our social security system should be there to support people in their time of need, not to allow unaccountable conglomerates to make easy money chasing the voiceless and the vulnerable. Now is the time to draw a line under the grotesque profit model in our welfare system, because that model has failed: it has failed the individuals it was set up to help; it has failed employees; and it has failed the taxpayer.

All of us have horrific stories of individuals who have fallen foul of Concentrix. In my constituent’s case, her tax credits were cancelled while she was in a coma. Rather than answering for these failures, which lie squarely at the Government’s door, Ministers have preferred to throw this hapless contractor under the bus. However, as one senior Concentrix employee wrote to me:

“Every single action we took was directly informed by HMRC and was compliant in full with their guidance… there will be no investigation because there are paper trails after paper trails showing that we have only ever followed client instructions on amending claims.”

I was pleased to hear today that that is no longer the case and that there will be an investigation, because from start to finish this has been a mess entirely of the Government’s own making, and one for which they have not yet answered.

The company that conducted the trial that preceded Concentrix, Transactis, incorrectly removed entire awards regardless of evidence provided to the contrary. Despite the alarm bells that should have been ringing loud and clear in their ears, Ministers decided to push on. It was the beginning of a pattern that is now all too familiar.

Ministers have still not answered for structuring a contract that put maximising revenue at its heart in attempting to assess error and fraud—not accuracy, not meeting quality service standards, and certainly not customer service, but making as much money as possible off the backs of the vulnerable. Ministers have not answered for the measures they included in the contract to maximise revenue. HMRC “profiled”—that is the Government’s own word—1.4 million vulnerable individuals and then unleashed Concentrix to carry out its dirty work.

We do not know—they will not tell me, despite repeated requests—what indicators the Government used to establish which groups to target. Given what we have heard today, it is clear who was in that demographic: single mothers with children. It is some measure of justice that it was women like that—thousands of them across the country—who brought this contract crashing down with their articulate, brilliant campaign.

That is not the only issue with the contract, because the process also turned the burden of proof on its head. HMRC was asking tax credit claimants to prove that their claim had not been made in error. They were asking people to prove a negative, as my hon. Friend the Member for Garston and Halewood (Maria Eagle) explained so eloquently. The Tax Credits Act 2002 clearly states that HMRC can amend or terminate tax credit awards only if it has significant grounds for believing that they are erroneous. It does not allow them to shift the burden of proof on to the claimant to disprove that a tax credit award has been made erroneously. That led one young mother to say to me, in tears, that she felt that she was being “treated like a criminal” and that Concentrix was treating her as “guilty until proven innocent.” One mistake like that would have been unacceptable, but 11,000 people had to apply for mandatory reconsideration in the past year alone. That cannot simply be passed off as a mistake; it was the deliberate design of the contract itself.

HMRC employed a contractor with just 500 staff to target over 2 million people. That meant the company’s pressured, poorly trained and low-paid staff were being instructed to open dozens of highly sensitive cases every day, leaving the phone lines permanently engaged, as we have heard. Concentrix staff have told me that the call volumes were such that the company would have needed to triple its staff in order to answer the phones.

Astonishingly, despite the failure of the trial, despite the highly sensitive nature of the contract, and despite the sheer volume of individuals a completely untested private sector provider had been designated to pursue, we now know that the Government did not actually monitor the performance for the first year of the contract. HMRC had no idea how many performance failures the contractor was incurring. Once it started monitoring that, it soon found out: over 120 breaches in the space of just nine months; and 13 black performance failures. Ironically, HMRC is up for an award this year for analysis and use of evidence. I very much hope that this is not viewed as best practice across Whitehall.

[Christian Matheson (City of Chester) (Lab)]

Does my hon. Friend share my concern that the chaos she is outlining will end up costing the taxpayer a whole lot more than any money that was saved in the first place?

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[Louise Haigh]

That is a major concern, not least because HMRC has now had to allocate hundreds more staff to deal with the backlog that Concentrix caused, because this was failure on a monumental scale from start to finish. It seems that Ministers did not pay the blindest bit of notice until the scandal reached the media, because we now know that HMRC was about to renew the contract before the scandal hit.

The Government have traded on welfare as a dirty word, and now they are seeing the despicable consequences of their political attacks: single parents and families who have done nothing wrong being ruthlessly pursued by an unaccountable US firm for profit. Could this contract have been drawn up had the Government not fuelled a contemptible narrative about those on low pay and those who rely on tax credits to get by?

We welcome the fact that the National Audit Office will be investigating the drawing-up of this contract. Can we be assured that that will include the management of the contract and the profiling assumptions underpinning it? Will the NAO release any impact assessment that must have accompanied the contract? Will the Minister assure us that any compensation awarded will not be counted towards tax credit awards?

[Kevin Foster]

Does the hon. Lady agree that the National Audit Office is independent and works for this Parliament, not for the Government? Therefore, the NAO would structure how it conducted its inquiry, not necessarily a Minister. That is the core of what we want: somebody independent who will get to the nub of this and present evidence to this Parliament, not necessarily the Government.

[Louise Haigh]

I completely agree, and it is vital that this is an independent review, because, as we have heard on both sides of the debate, these problems originate from the Government themselves. However, we need to know that this information will be published, and if the NAO does not do that, we would call on the Minister to publish it alongside this inquiry.

Above all else, if the Government’s rhetoric is worth a penny, they will surely pledge to call time on contracts such as this, which target innocent single parents and families, and encourage the private sector to profit from them. That has no place in our welfare system.

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[Simon Kirby]

Some of the information used was very poor—some of it applied to people who no longer lived at the address—but, at the end of the day, the review will provide lessons for us all to learn.

The hon. Member for Paisley and Renfrewshire South said that the evidence was flimsy. HMRC sent Concentrix cases to review if it thought that they were worth checking because there was an indication that the tax credits claim might be incorrect. Concentrix and HMRC will never be able to screen out all cases that do not involve error or fraud through data analytics alone. That is why—this point is important—HMRC and Concentrix write to customers to ask for more evidence to inform decisions.

The hon. Lady asked for an apology. At a sitting of the Work and Pensions Committee on 13 October, the chief executive of HMRC apologised for the worry and distress caused to claimants. On behalf of the Government, I echo that apology today.

The hon. Member for Stretford and Urmston (Kate Green) said that she thought that the letters were unconvincing and misleading. This is an area in which there are lessons to be learned. It was said that customers could not provide the evidence requested. Most people were able to provide the information asked for, but we want to make it easier and cheaper to supply information in the future, so we are looking at ways of improving the customer journey on tax credits.

[Louise Haigh]

Will the Minister give way?

[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—

[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.

[Louise Haigh]

That is the central point. As my hon. Friend the Member for Garston and Halewood (Maria Eagle) said, the information was duff, and was acted on incorrectly, because the contract was designed to incentivise Concentrix through profit to incorrectly target people and strip them of their tax credits. Will the Minister commit to reviewing payment by results across our welfare system?

[Simon Kirby]

I will not commit to that. The hon. Lady’s points will be picked up by the NAO. Not all the information was duff, but there are clearly lessons to learn from the exercise.

The hon. Member for Foyle (Mark Durkan) talked about the 30-day cut-off. Tax credit regulations require a claimant to be given a minimum of 30 days to respond to a request for information. The hon. Member for Dundee West (Chris Law) mentioned training. I assure him that Concentrix staff are trained in the same way as HMRC staff.

The hon. Member for Garston and Halewood (Maria Eagle) asked about unresolved cases. I am not sure whether the Financial Secretary was in the Chamber to hear that, but if the hon. Lady writes to my hon. Friend, she will, I am sure, do her very best to help to resolve those cases. The hon. Lady also asked about the significance of August. August was a particularly busy time.