Mark Durkan
Main Page: Mark Durkan (Social Democratic & Labour Party - Foyle)Department Debates - View all Mark Durkan's debates with the HM Treasury
(8 years, 1 month ago)
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Jane Ellison
No. I really must make some progress—you may not indulge me too much more, Mr Speaker, if I give way again—but I will see whether I can take further interventions later.
As hon. Members should be aware, anyone who wishes to challenge any changes made to their tax credits has a right to request a mandatory reconsideration of their case. As of the start of this week, HMRC had received more than 26,000 such requests. Staff have already reviewed and resolved more than three quarters of them, and they are up to date with the Concentrix reviews. As I have said, that means that the cases have been resolved in accordance with the facts; it does not necessarily mean that there was a problem in each case. However, at least such cases have been resolved, and closing the remaining cases will of course be a priority.
That gives the House a sense of the necessary steps being taken to fix the immediate problem: restoring quality customer service, resolving people’s claims and checking that the right decisions have been made. But I know that hon. Members have been worried about people falling into hardship if their claim has been incorrectly withdrawn or reduced due to errors. That has quite rightly been the source of many of the questions we have been asked. I reassure Members that a system is in place to support anyone who contacts HMRC in such circumstances. They will be helped to request a review of the decision taken—the so-called mandatory reconsideration that I have just mentioned. Those in hardship will then receive a payment of £100, normally on the following day, while their review is being handled.
Jane Ellison
Not just at the moment—I must make some progress.
Particular individuals in particular circumstances are more prone to error. Over the years that tax credits have been running quite a substantial picture has built up of where error is more likely to exist.
Mark Durkan (Foyle) (SDLP)
Like other Members, I pay tribute to the hon. Member for Salford and Eccles (Rebecca Long Bailey) for introducing the debate and setting out her points so cogently, particularly in relation to some of the details of the contract itself, and the opportunities and responsibilities that that contract gave to HMRC to better deal with the problems that did emerge. Both HMRC and the then Financial Secretary, the right hon. Member for South West Hertfordshire (Mr Gauke), must have been aware of those problems, given the number of representations and complaints that were coming through from Members, and the range of questions that were being asked. None of those questions was properly dealt with, and all the complaints were treated fairly dismissively along the lines of young Mr Grace—“You’ve all done very well!” There seemed to be no problem whatever as far as that Minister was concerned. I am glad that, today, the current Financial Secretary to the Treasury is indicating that she will take a more personal interest in how these details are handled in future.
The motion could have been wider. It could have put into its sights the role and rationale of HMRC itself, as well as the responsibilities of Ministers. This debacle happened in the context of a progressive rundown in the capacity and character of HMRC, which then led to it outsourcing bits of work. It is the nature of that work and outsourcing that really raises questions about the mentality in HMRC.
In a written answer yesterday, the Minister confirmed this to me:
“during the course of the contract, HMRC delegated a total caseload of 2,209,500 cases for high risk renewal checks by Concentrix.”
It was HMRC itself that decided that more than 2 million cases could be appraised as high-risk renewals. When Concentrix received those cases, 1,635,676 of them were not the subject of further investigation for fraud or error, which means that it screened out 74% of the caseload that had been identified by HMRC. I ask Members to think about what we would have been dealing with if there had not been that screening. We would have had multiple versions of this problem—the adversity endured by our constituents; and the absurdity in the grievous conjecture that was being used against people.
The high-risk cases referred to Concentrix were placed in three main risk categories, and those three categories were decided by, and designed by, HMRC, not by Concentrix. The first was undeclared partner, which accounted for 1,398,908 cases. The second was work and hours, which accounted for 564,983, and the third was childcare, which amounted for 245,609 cases. Now that this work is returning to HMRC, I hope that Ministers will ensure that there is a change of culture there so that there is no longer such hostility and suspicion towards HMRC’s customers.
Sammy Wilson
The incentive for Concentrix was that it got paid only for those cases in which, eventually, it could be shown that there was genuine error or fraud. Does the hon. Gentleman accept that if that incentive does not rest with HMRC, the situation could become even worse, because HMRC will have no incentive to screen out any of those cases?
Mark Durkan
The hon. Gentleman raises an important question about future performance. Many of us have had our own difficulties when dealing with HMRC about tax credits. Certainly in my constituency, I have had some particular issues in relation to the plight of cross-border workers, whose position is constantly mishandled by HMRC. At times, it seems that there is no end in sight to the difficulties.
On the hon. Gentleman’s question, I note that payment by results is the outcome after the mandatory reconsideration stage, so some of the arguments about the degree of incentivisation have to be measured against that point. Let us remember that what drove the cut-off of tax credits for most people was the application of the compliance requirement of 30 days. Therefore, officials using the HMRC system and the HMRC standard that was contracted to Concentrix sent letters to people saying, “Unless you return information within 30 days, your benefit will be stopped.” Most of the stops were made because information was supposedly not received within 30 days. That is why many cases were overturned on mandatory reconsideration, because by that stage the information had been provided.
That raises questions for us as legislators in the House. Where does the 30-day rule come from? It was introduced in the Tax Credits Act 2002. We have here a gross misapplication by HMRC of the terms of that Act, especially in terms of the high-risk renewal regime, the high-risk change of circumstances regime and the annual declaration. The Minister did not address the fact that thousands of people had their tax credits stopped this summer by HMRC directly. That had nothing to do with Concentrix. HMRC was terminating benefits because people had not returned their annual declaration on time. Compliance grounds were being used directly against people by HMRC. When those people were cut off in August—45,000 of them in the week beginning 8 August—they naturally assumed that that cut-off was being implemented by Concentrix. They were ringing Concentrix and we as MPs were ringing Concentrix, but it was actually HMRC that had implemented the cut-off, although some of those cases might have previously been referred to Concentrix. We had the daft anomaly of HMRC handing work to Concentrix, saying “Investigate these people as high-risk renewal claims,” while, at the same time, it decided to go against those same people on compliance grounds for annual declarations. It is no wonder that confusion, hardship and hurt was caused, and there are fundamental questions for HMRC as well.
I hope that the Minister will look at this again. She says that lessons will be learned. I hope that this will not be like Brexit means Brexit; “lessons will be learned” should mean that lessons will be learned. We hope that those lessons will be learned within HMRC itself, and that they will include looking at whether there has been particular misuse of provisions of the 2002 Act.
Regulation 32 of the Tax Credits (Claims and Notifications) Regulations 2002 states that the period of notice given for a person to submit information or evidence
“shall not be less than 30 days after the date of the notice.”
The period does not have to be 30 days—that is the minimum—but who decided that it should be 30 days? HMRC took that decision, and it passed that on to Concentrix, saying that that statute set out how the system works and how it had to proceed.
Did Ministers sign off on the 30-day period? Were they notified that those were the terms that HMRC was operating? Were they notified that those were the terms that Concentrix was operating? If we know that the 30-day cut-off was responsible—the Minister has said this herself—will it be reviewed? There is the question of whether we, as Parliament, need to review that, because some of these flaws are sourced in the legislation itself and its over-rigorous application by HMRC.
Many people have voiced their criticisms of Concentrix and its performance, and have spoken about their difficulties getting through to it. By means of this debate, we need to get through to HMRC, which is where the core responsibility lies. A culture change is needed there, and I welcome the Minister’s commitment to keep an eye on that in the future.
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.
Mark Durkan
The Financial Secretary told me in a written answer yesterday that between 1 August and 31 August, HMRC automatically stopped 365,483 tax credits—in just that one month—as a direct result of customers failing to comply with the requirements of the annual renewal process. How many stoppages were made by Concentrix and how many were made directly by HMRC itself?
Simon Kirby
I am happy to commit to look carefully at that matter and to get back to the hon. Gentleman.
I clarify that hardship payments are effectively tax credits brought forward. Compensation, however, is not offset against tax credits and is a separate payment. That is an important distinction to make.
The hon. Member for Ochil and South Perthshire (Ms Ahmed-Sheikh) mentioned the timeline. It is important to understand the timeline, and she makes valuable points about how we can ease the customer journey and introduce new measures. That is work in progress, and I do not think there is a lot of disagreement about some of her more sensible suggestions.
In response to the hon. Member for Bootle, I would say that a lot of issues have been raised in the debate. They will be looked at very carefully by the National Audit Office. We are giving careful consideration to the balance of the contract with Concentrix to make sure that nothing else goes wrong. This is about making sure that the most vulnerable people who need help get it, and that we move forward and learn from the exercise.
Although we recognise that the service provided was simply not good enough, it was right to review people’s claims for tax credits. That must go hand in hand with quality customer service that minimises distress and disruption to the people involved. Concentrix fell short of providing that standard of service in recent times, and, as a result, a large number of people were caused undue distress and worry. We have taken immediate action to restore a fast, fair and efficient service to anyone claiming tax credits. We will take further action in the days and months ahead. We will look at what went wrong, and at the NAO report, and learn from those lessons. We want to ensure that we provide the kind of quality tax and benefits service that the British public deserve.
Question put and agreed to.
Resolved,
That this House notes that Concentrix has not fully met the performance standards set out in its contract with the HM Revenue and Customs to correct tax credit claims, and welcomes the announcement that the services performed by Concentrix will be brought back in-house to HMRC next year; and calls on the Government to conduct a comprehensive investigation into the performance of Concentrix under its contract with HMRC, which includes a consideration of the potential effect on other HMRC services, take urgent action to compensate people who have erroneously had tax credits withdrawn by the company, and in doing so mitigate any adverse effect or reduction in service for claimants.