Concentrix

Rebecca Long Bailey Excerpts

Wednesday 26th October 2016 Commons Chamber

[Rebecca Long Bailey (Salford and Eccles) (Lab)]

I beg to move,

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potential effect on other HMRC services, take urgent action to compensate people who have erroneously had tax credits withdrawn by the company, and in doing so mitigate any adverse effect or reduction in service for claimants.

The topic of today’s first Opposition day debate affects every single hon. Member’s constituency. I have received many case studies from Labour Members, and I thank them for their hard work on this issue. I welcome the comments in the amendment tabled by Scottish National party Members; I am very pleased that we are on the same page on this issue. We have heard how constituents of Conservative Members have been affected by this scandal too. My own inbox and postbag have seen a surge in the number of anxious and distressed families needing my help after their tax credits have been stopped. I put on record my thanks to my right hon. Friend the Member for Slough (Fiona Mactaggart) and my hon. Friend the Member for Sheffield, Heeley (Louise Haigh), and to the Chairs of the Public Accounts Committee, the Work and Pensions Committee and the Treasury Committee, for their hard work in shining the spotlight on this very serious issue.

I am sure that Members will assist the Minister by illustrating their own cases, but I will begin by outlining a shocking yet typical case study brought to my attention recently. The lady in question is a single parent with three children and a job, although at the time of her exchanges with Concentrix she had just had a baby and was on maternity leave. This lady had been accused on two separate occasions of living with an undisclosed partner. On both occasions, she had never met the person. The first time, she was accused of living with a man who turned out to be the former tenant of the housing association flat that she now lives in. This was sorted out fairly easily. We can imagine her shock, though, when only months later she received another letter accusing her of living with another undisclosed partner. When she phoned Concentrix, she was told that she was living with a woman of whom she had never heard. The lady pointed out that there was absolutely no truth in that allegation and sent all the requested documentation, by recorded delivery, to Concentrix. She received no response. She gave birth to her third child two weeks later.

When the claimant phoned Concentrix, she was told that the documents that she had sent were not on the system, and she then received a letter cancelling her tax credits. That left her with only maternity allowance to live on and a demand to repay £4,100.

The lady in question obtained replacement documentation, after Concentrix appeared to have lost the originals, and sent a request for mandatory reconsideration, again by recorded delivery, to Concentrix. By this time, she was running very short of money and contacted her Member of Parliament for help. When the parliamentary office investigated the matter, it was told that there was a backlog of mandatory reconsiderations, so it could take six weeks for the case to be looked at.

By this time, the lady in question had been waiting for three months for a resolution to her case—that is three months in complete stress and turmoil, on the breadline, when she should have been enjoying those precious early moments of her child’s life.

[Peter Kyle (Hove) (Lab)]

I am grateful to my hon. Friend for giving way so early on. I was contacted not long ago by a woman in a similar situation. Her tax credits were cut because Concentrix accused her of having a lesbian relationship with her sister. It took her coming to me as her Member of Parliament and calling Concentrix myself before it started to believe the truth. Is it not absurd that it takes a direct intervention from a Member of Parliament before this ridiculous company takes these people seriously?

[Rebecca Long Bailey]

I thank my hon. Friend for his comments. The term, “It beggars belief” springs to mind. Unfortunately, his case is not an isolated one.

After much chasing, it was eventually confirmed that the lady had no connection to this mystery woman. She was paid all the money she was owed, and the demand to repay the £4,100 was withdrawn.

[Clive Efford (Eltham) (Lab)]

We all have examples of constituents with similar stories, but the Government are showing a complete lack of urgency. People are left destitute by these decisions, for no good reason. We want to hear the Government say that they are going to put in extra resources to expedite investigations so that these people are paid and compensated, if necessary at the expense of Concentrix.

[Rebecca Long Bailey]

I could not agree more. The case to which I have referred is not an isolated one. According to the Government’s own figures, the company has considered about 667,000 cases, of which 103,000 have been amended. That means that 15% of investigations have wrongly pursued perfectly legitimate tax credit claimants, and they are simply the ones who have had the strength to come forward and present themselves, including to their MPs, as we have heard.

[Maria Eagle (Garston and Halewood) (Lab)]

In every single one of the Concentrix cases that has been taken up by my office so far and that has been resolved, the payment has been put back in place. In other words, they have been 100% wrong. What does my hon. Friend think that the Government ought to do about that?

[Rebecca Long Bailey]

I think that the cases we have seen so far are the tip of the iceberg. The Government have a responsibility to ensure that all cases are adequately investigated, and that no one has fallen through the cracks and not presented themselves either to their MP or directly to Concentrix.

[Hywel Williams (Arfon) (PC)]

I have spoken in previous debates about Capita’s failures in delaying the payment of disability benefits to some of our most vulnerable people. It seems to me that the only difference this time is the name of the corporation involved. Is not the fundamental issue that private profit-making companies are failing to deliver critical Government services?

[Rebecca Long Bailey]

The hon. Gentleman makes an interesting point. I will come on in due course to the issue of the contract and how it is delivered, because there needs to be a wider investigation and discussion about that.

In 2014-15, there were no appeals against a decision. In 2015-16, there were 365, and from April to August 2016, there were 176. A similar spike is clear in the number of mandatory reconsiderations, which more than quadrupled between 2014-15 and 2015-16. It is even more shocking that that number almost quadrupled again in the period up to mid-August.

[Christina Rees (Neath) (Lab/Co-op)]

Does my hon. Friend agree that the Government should commit to an official investigation into Concentrix’s conduct since it was awarded the contract in 2014, so that we know how what she has described was allowed to happen?

[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.

[Tristram Hunt (Stoke-on-Trent Central) (Lab)]

My hon. Friend is making a forensic case. Behind these facts and figures are very real human cases of people, particularly women and single mothers, who are being absolutely hammered by Concentrix. I have constituents who are going hungry, and whose children are going hungry, because of the incompetence of Concentrix. That is what we need the Minister to answer about.

[Rebecca Long Bailey]

My hon. Friend makes a powerful point; he is 100% correct. This is not simply a case of rapping Concentrix on the back of the hand. These contractual failings have caused real human suffering, and the Government need to address them urgently.

[Richard Arkless (Dumfries and Galloway) (SNP)]

Is the hon. Lady aware of the spikes in such claims that she talks about arising in the week before conference recess and in the days following, when Concentrix was stripped of the contract? We all know what is happening here: drilling down into the contract to avoid exit penalties. Will the Government shed any light on that?

[Rebecca Long Bailey]

I hope that the Minister will address the hon. Gentleman’s question in her speech because we all want to hear the answer.

Several provisions in the contract relate to payment by delivery. The head of the National Audit Office stated in June 2015:

“While its supporters argue that, by its nature, Payment by Results offers value for money, these contracts are hard to get right, which generates risk and cost for commissioners…the increased risk and cost may be justified, but this requires credible evidence. Without such evidence, commissioners may be using this mechanism in circumstances to which it is ill-suited, to the detriment of value for money.”

Under schedule A6.1 of the contract, HMRC required Concentrix to deliver, over the duration of the contract, some £1.03 billion in savings in annually managed expenditure. I appreciate that the contract used estimates to forecast potential savings, but given the model, how could anyone have been certain about the position without a crystal ball? In answer to parliamentary questions, it was revealed that total savings in annual managed expenditure were £2.3 million in 2014-15, £122.3 million in 2015-16, and £159.5 million in 2016-17, to mid-August 2016.

[Yvonne Fovargue (Makerfield) (Lab)]

Does my hon. Friend agree that these savings were made by my constituents facing a similar situation—100% of them have had their benefits paid back—going to food banks for the first time in their lives? The place-based team in Platt Bridge has seen a spike of some 50 families going to them because of problems with their tax credits.

[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.

[Chris Law (Dundee West) (SNP)]

I have just looked at how far back payment by results goes. Will new Labour, or old new Labour, take some responsibility—payment by results was introduced in the English NHS in 2003-04—and condemn it roundly in the Chamber today?

--- Later in debate ---

[Rebecca Long Bailey]

We can all learn lessons by reviewing the handling of payment-by-results contracts. I hope that the Minister will consider those experiences when she conducts a review of the delivery of such contracts.

[Kevin Foster (Torbay) (Con)]

Will the hon. Lady give way?

[Sammy Wilson (East Antrim) (DUP)]

Will the hon. Lady give way?

[Rebecca Long Bailey]

No. I have one paragraph left before I finish.

I want to conclude by speaking about the victims of these terrible systematic failures. They did not deserve to face the hardship they have endured, and they must be adequately compensated for their losses. Will the Minister confirm that they will be compensated? On what basis will they be compensated, and what is the timeframe for that action? Will she confirm that, in addressing the problem and bringing services back into HMRC, she will mitigate any adverse effect on or reduction in service for complainants? I ask her to keep an eye out for the PCS report because it is a real eye-opener. I know that the Minister has experienced terrible cases on her own doorstep. She has seen the effects at first hand and seems to be very empathetic. As such, will she issue an apology on behalf of her Government for the distress and hardship that has been caused? That is the very least our constituents deserve.

--- Later in debate ---

[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.

[Rebecca Long Bailey]

I thank the Minister for giving way, as I know time is precious. I appreciate that she cannot divulge the terms of the ongoing negotiations for the termination of the contract, but will she commit to coming back to the House to make a statement as soon as those terms are finalised? Will she provide the information that she can obtain—for example, when the dispute process was first examined and the outcome of that process? We are at the very end of a contractual process, and simply want to know what the timeline was.

[Jane Ellison]

Again, those are matters I will return to, in part because there will be a number of examinations of this situation—the National Audit Office has already talked about the work it will do. I will come on to that.