Sammy Wilson
Main Page: Sammy Wilson (Democratic Unionist Party - East Antrim)Department Debates - View all Sammy Wilson's debates with the HM Treasury
(7 years, 6 months ago)
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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.
Jane Ellison
Most of the data that both HMRC and Concentrix are working from are the sort of data Members would expect companies and HMRC to be using in this regard. Concentrix makes some reference to credit data. Because there are so many tax credit claims, a lot of the work on pointing to where there might be errors is based on the history of where there have been substantial errors over time, and those individuals and people—
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.
Jane Ellison
No, I am sorry, I am going to make some progress.
We have been working—[Interruption.] The hon. Member for Garston and Halewood (Maria Eagle) says the information is duff, but there are a lot of cases of error, and some of fraud, in the system. It is not the case that all the information is, in her word, duff—far from it. I will come on to mention the figures involved, but all right hon. and hon. Members know that there are times when people give the wrong information; that is mostly because of error, but sometimes because of fraud.
Jane Ellison
I will just make a bit more progress, then I will bring the hon. Gentleman in.
We are working hard to address the wider issues, many of which have been alluded to. I will move on to the three main points in the motion. We agree that Concentrix’s performance fell below the standards required in its contract. I do not want to ignore the millions of pounds’ worth of savings it has helped to deliver for the taxpayer, which might not otherwise have been achieved, but when the level of customer service is so far below what we expect, it is right that we take action.
First, then, as set out under the terms of the contract, payment to Concentrix will be cut in response to its failure to adhere to the standards required. Secondly, as HMRC announced on 13 September and I confirmed the following day, its contract will not be renewed beyond its end date in May 2017, nor will any further procurement exercise for tax credit checks be taken forward at that time. Thirdly, I can confirm that HMRC is in discussion with Concentrix to agree a negotiated early exit from the contact.
Jane Ellison
I will give way to the hon. Member for East Antrim (Sammy Wilson), because he has been waiting a long time.
Sammy Wilson
Although Members accept that cases of hardship have been created, does the Minister also accept that in a written answer to the House she indicated that Concentrix was meeting its 75-day service level, had an average answer time of six minutes for phone calls and was making decisions within 23 days, and that of the 660,000 appealed cases that went to HMRC, only 280, or 0.6%, were upheld? Does she accept that not all of the blame goes on Concentrix, which in many ways met its targets but is now being made a scapegoat?
Jane Ellison
I have said, both in reply to the urgent question on 14 September and in my opening remarks today, that front-line Concentrix staff have been working hard to resolve these issues. The problems of a contract like this, and of getting through on the phone, are never usually the fault of the person you finally get through to. It is right to say that people have been working hard. I suspect the hon. Gentleman represents many of the people who work there.
Sammy Wilson
Does the hon. Lady also accept that, although 1.5 million cases were referred to Concentrix, it whittled them down to less than a fifth of the cases sent by HMRC? Therefore, had it been in HMRC’s control, a lot more people might have been affected than were actually affected.
Mhairi Black
Another interesting point is that, when the Work and Pensions Committee looked into the matter, we discovered that Concentrix had subcontractors —three, I believe—but it was not allowed to go into any detail about who they were or what their methods were. I hope that, at some point, the Government will answer those questions.
Like the constituents of many other Members here, all the constituents I dealt with did not discover that their tax credits had been stopped until they went to collect them from the bank and discovered that there was nothing. When I started to look into the matter, I realised that this is truly the most ridiculous level of incompetence that I have ever heard of. People were accused of being in relationships with dead tenants 70 years their senior. They were accused of being in relationships with some of their own children. In my constituency, Scottish flat numbers seemed to be a major issue for Concentrix because it could not get its head around the fact that flat 1/1 and 1/2 were across the landing from each other and were not the same house.
The best one, though, has to be the case of RS McColl. To provide a bit of perspective, RS McColl is a corner shop that is as common in Scotland as WH Smith is in England, yet people were being accused of living with this mysterious Mr McColl because their flat was above an RS McColl shop. At no point did anyone in Concentrix or HMRC think, “Wait a minute. This Casanova is getting about a bit.” This would be funny—until we remember that we are talking about people’s livelihoods and their survival.
As a member of the Work and Pensions Committee, I took part in the evidence session where we heard from claimants who had had their tax credits stopped. This is where we have to remember the human costs. We first heard from a woman called Marie, a mother of two who went six weeks with no support. She did not discover that her benefits had been stopped until she went to the bank. She said that she genuinely could not fill her cupboards with any food and she spoke of the shame of having to take her kids to a food bank and having to rely on the charity of others to be able to eat.
A woman called Sarah had no hand and suffered chronic pain every day of her life. She had two young kids, who were both under the age of five. She spent a combined total of 19 hours on the phone waiting for someone from Concentrix to answer. When she finally did get through to someone, the person at the other end of the phone just kept saying, “I don’t know; sorry about that. You need to phone back and try to get someone else.” She was asked to write a letter. She explained she could not write due to her disability, only to be told, “Well, sorry, you’ll just need to find someone else to write it”. At that point, that woman broke down in tears in front of the Committee. She was overwhelmed with emotion when she spoke about the fact that she had to look at her kids knowing that she did not know where the next meal was coming from.
Kevin Foster
Will the hon. Lady give it a moment? I shall make some more progress, for now.
I said that HMRC was moving in. It should be noted that that organisation has had its own customer service issues in the past. In fact, in the next half hour my fellow members of the Public Accounts Committee will be discussing and examining its customer service. There have been some welcome improvements recently, but many Members who are present today will have had their own experiences of sitting and waiting to get through to the “hotline”.
Sammy Wilson
It is not surprising that when HMRC was challenged to specify the number of cases it had dealt with that had involved errors and how long it had taken it to respond to those errors, it could not give the figures. We cannot even make a comparison between HMRC’s performance and that of Concentrix.
Kevin Foster
This afternoon we received a fairly detailed report produced by the National Audit Office on HMRC’s annual report, which is being discussed by the Public Accounts Committee and which goes into some depth about HMRC’s performance and customer service standards. It can be read in comparison with what we have heard about Concentrix. The PAC is also discussing the tax gap, and the need to ensure that HMRC is performing as we would expect it to in ensuring that the taxes for which we legislate in the House are paid by those who are required to pay them. I genuinely welcome the fact that the National Audit Office will be investigating this matter, and, in that context, I think that some of the comments that have been made today may have been slightly premature.
I was going to intervene on the shadow Minister when she was commenting on our having an independent and fearless inquiry commissioned by the Government. I was struggling to think how more independent and fearless an inquiry could be than a report by the NAO, which is an arm of this Parliament, not of Government. It produces its reports independently. Yes, it will liaise with Treasury officials to ensure that facts are agreed when coming to its conclusions, but ultimately the Comptroller and Auditor General and his team answer to this House via the PAC. It has never held back from making comments, no matter how difficult and challenging for Government Departments, where required. The shadow Minister might wish to intervene and tell us how she felt that another inquiry would be different from that, but I think the right way forward is to get the NAO to look at this and bring a report that can be scrutinised fully and in depth in this House from a team of subject experts who understand how HMRC, the DWP and the benefits system work, and who owe a duty to Parliament, not to the Government. I am sure the depth of information they bring forward will inform future debates on this subject.
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?
Stephen Doughty
I thank the Minister for those comments, which will provide some reassurance. We will certainly follow up cases with her office.
All the cases have common themes, one of which is their impact on single mothers and families with complex needs, often including children with health problems. These people are suddenly being left without food and money. Individuals with mental health issues are facing additional stress and anxiety. People have contacted me in desperation, by every possible means. Often they had not realised that their MP was the person to go to, but I have been contacted on Twitter and on Facebook, and by email and by phone. These people have been through the agony and desperation of not being able to get through on the helplines and, in some cases, they have found that the phone has been put down on them, as I outlined earlier. Obviously that is completely unacceptable, and I am glad that the Minister recognises that.
We need to deal with the problem of the final responses that people receive. Those responses often do not explain why the claims were stopped or reinstated, leaving constituents unsure about whether the same thing will happen again, and they do not give an apology. I appreciate what the Minister has said today, but we need to apologise directly to the individuals and families who have been affected. I have talked about the long delays, but an inability to speak to someone directly about the situation creates frustration and distress. We have heard examples of people receiving contradictory and confusing correspondence, and that adds to the pressure and concern that they experience. We have had to refer many constituents to food banks, which causes deep distress to anybody who has to go through it. These people, through no fault of their own, have found themselves in that terrible situation at the end of these erroneous investigations.
Sammy Wilson
Does the hon. Gentleman accept that in many cases this has happened simply because, as the Minister indicated, Concentrix was following the processes, guidance and requirements of HMRC? The worrying thing is that if the situation does not change, it will not matter whether we change the contract between Concentrix and HMRC, as the same things will happen again.
Stephen Doughty
The hon. Gentleman makes an important point that shows why we need a full independent investigation into what has gone wrong. Such a situation applies not just to Concentrix. We can look at what has happened with Capita, with contracts such as that for Clearsprings asylum accommodation, and with Atos. There is a common theme across Government contracts whereby things are contracted out but then not properly monitored and followed up. The people who suffer in the end are some of the most vulnerable and the poorest. A common thread is that some of our constituents in the most difficult situations are affected, so the Government need to take a wholesale look at whether they should even be contracting out these sorts of services. When they should be, and there is a legitimate reason for doing so, the Government need to monitor and follow up what is going on, down to the level of the experience that individuals face. That is the real thing that matters in all this. These people often have extremely complex lives and face many pressures.
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.