Outsourcing and Tax Credits

Debate between Louise Haigh and Simon Kirby

Friday 4th November 2016 Commons Chamber

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

(Urgent Question): To ask the Chancellor of the Exchequer if he will make a statement on the change in Government policy in relation to outsourcing and tax credits.

[The Economic Secretary to the Treasury (Simon Kirby)]

rose—

[Simon Kirby]

Not yet.

I can confirm that there has been no change in Government policy on outsourcing. I suspect that the hon. Member for Sheffield, Heeley (Louise Haigh) has asked this urgent question in the light of the recent concerns surrounding the Government’s outsourcing contract with Concentrix.

Her Majesty’s Revenue and Customs places the utmost importance on providing a quality service to its customers. As the Government have made clear, high standards were not met in recent months by Concentrix, the company HMRC had engaged to help us in the important work of tackling fraud and error in the tax credits system. Once this became clear, HMRC took steps to rectify the situation and deployed HMRC staff as quickly as possible. From that point, no new cases were passed to Concentrix, and HMRC took back 181,000 individual cases that were being managed by Concentrix. I can reassure the House that not only have all the 181,000 cases been finalised, but HMRC has now restored the expected quality levels of customer service to ensure people receive the tax credits to which they are entitled. HMRC continues to review outstanding cases in which a mandatory reconsideration has been requested, and it has taken steps regarding the future of the contract with Concentrix.

On 14 September, the Financial Secretary to the Treasury informed the House that HMRC would not be renewing the contract with Concentrix. Last week, she informed the House that HMRC is currently in discussions with Concentrix to agree a negotiated early exit to the contract. These commercial discussions continue. I want to be clear that HMRC will not go back to the market to seek another partner to replace Concentrix and provide additional capacity to challenge error and fraud in the tax credit system. There has, however, been no change in Government policy on outsourcing, which can be an appropriate way to deliver both quality public services and savings for the taxpayer. I assure the House that HMRC is committed to learning the lessons from the problems that have arisen over the past months, supported by the independent review of the National Audit Office.

[Louise Haigh]

Thank you, Mr Deputy Speaker, for granting this urgent question. I think we all agree that the continuing fallout from the debacle surrounding Concentrix will not be going away soon.

Last Thursday, the day after a debate in this House, the chief executive of HMRC announced to the Treasury Committee:

“We will not go back into the market for this kind of thing”.

He also said:

“We will not be going back to the market to seek a third party to help us in any way with this kind of thing”.

He was obviously referring to the outsourcing of tax credits. This announcement was unequivocal, and it represented a considerable shift for the Government and their policy on welfare. The implications of such an announcement for private sector involvement in our welfare state are profound.

The contract between Concentrix and HMRC has revealed the grotesque consequences of the profit model in our welfare state. The chief executive of HMRC now clearly agrees that the private sector has no place in the delivery of welfare. He is absolutely right, but it is still embedded deep within our social security system. The company Maximus is still operating a £500 million contract to deliver the work capability assessments for personal independence payments conducted by Atos that are causing deep distress for thousands. If having a trade-off between profit maximisation and the principles of our welfare system has been deemed inappropriate for those on tax credits, why is it considered appropriate in other sensitive areas of our welfare state?

By setting this precedent, is the Treasury not accepting that, when it comes to the sensitivities around welfare, the private sector is uniquely incapable of determining the best interests of individuals on welfare? If not, what were the principles underlining the unequivocal announcement that there would be no longer be any third party involvement? Will this extend to the operation of universal credit? If not, many will see these words as a cynical manoeuvre to raise the hopes of many who should never again have to deal with a company that has so singularly failed them in the delivery of welfare.

Furthermore, I seek clarity on something the Minister’s colleague said in a debate in this House last month. The Financial Secretary said of the way in which Departments do something, that

“there are circumstances in which the use of a private company offers a cost-effective way”.—[Official Report, 14 September 2016; Vol. 614, c. 910.]

Are we now right in thinking that, after this announcement, the Government do not believe that those circumstances extend to our social security system?

Finally, I want to press the Minister to release the key characteristics used by HMRC to profile the individuals whom Concentrix was then unleashed to target. Given the unprecedented distress that the targeting by key characteristics has caused and the commensurate levels of error that they evidently caused, it is very clearly in the public interest that they are now released. I would be very grateful if the Minister gave me a firm commitment this morning to provide me with that information.

[Simon Kirby]

Clearly, there are lessons to be learned from this—[Interruption.]

Concentrix

Debate between Louise Haigh and Simon Kirby

Wednesday 26th October 2016 Commons Chamber

[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.