The Work and Pensions Select Committee report condemns Concentrix and HMRC for their ‘gross failure of customer service’ and for building a decision making process ‘stacked against claimants’.

HMRC gave Concentrix 1.5m tax credit claims in an April-August 2016 review cycle known as High Risk Renewal (HRR16). Concentrix wrote to 324,000 people asking for information to be provided within 30 days to demonstrate that they were entitled to tax credits.

The report says Concentrix and HMRC targeted ‘strike rates’ of benefits being removed. In the event, large numbers of those decisions were overturned on initial appeal, but in many cases people lost benefits for months as the systems used to process claims were ‘at best slow and at worst unreliable’.

The committee heard evidence that Concentrix suspended around 45,000 tax credit claims as part of HRR16. By October, approximately 15,000 of those cases had been subject to a mandatory review, well over double the expected 6,500 and a number which has since risen. The rate of success of those appeals was 90% to 95%.

The report states: ‘HMRC were not only complicit in the decision making process used by Concentrix: they pressured their failing contractor to subject yet more claimants to it.’

Amongst a catalogue of customer service problems, the report says some claimants were targeted on the basis that they merely shared some characteristics with unrelated fraud or error cases. Some claimants seeking to prove their eligibility were not informed of the full basis of the suspicions against them, such as the identity of a possible undeclared partner, and were tasked with proving the negative that they were not in a relationship with someone with some form of connection to them.

Letters were sent out by a sub-contractor and a large number were not received by claimants, with the result that the first some claimants knew they had lost their benefits was when they checked their bank accounts.

Many people who received letters from Concentrix requesting personal information such as bank statements were concerned that they were being scammed. MPs said this was understandable, especially given that the letters had Concentrix branding and it was a little-known private company.

Distance

The report states: ‘We are particularly concerned that HMRC resisted requests from Concentrix for their branding to be removed from future letters. This suggests that HMRC were seeking to distance themselves from the work being carried out on their behalf.’

In addition, in August 2016 Concentrix phone banks completely collapsed to the point that some claimants called tens of times and waited hours to speak to advisers. Less than 1% of calls were answered within the target five minutes on several days in mid-August, while average waiting times were 30 minutes at other points in the month.

The committee is equally damning of HMRC’s approach to customer service, pointing out that HMRC approved Concentrix’s plans; took three weeks to escalate the problems to senior staff; and added to the contractor’s workload by sending out 45,000 additional termination letters.

The report states: ‘HMRC agreed projections of demand and consequent proposals for staffing levels by Concentrix. These proved to wildly inaccurate. As the situation spiralled out of control only HMRC were in a position to assist. They should have intervened sooner.’

Evidence given to the committee showed that part of the problem was that the agreed forecasts of demand turned out to be highly inaccurate: Concentrix received 158,000 calls in August 2016 compared with the 33,000 expected in the plan agreed with HMRC in May 2016.

HMRC announced in September that it would not be renewing the three-year Concentrix contract when it came up for renewal in May 2017, and that it was bringing the work back in-house and deploying additional resources from its own staff. Subsequently HMRC terminated the contract early.

However, the report is critical of HMRC’s decision making and states: ‘Contrary to the protestations of senior officials, however, HMRC intended to extend the contract. Negotiations were at a late stage and continued until just four working days before HMRC pulled the plug.

‘HMRC gave unnecessarily short notice to Concentrix of their decision not to renew their contract and to transfer much of their work in-house. Public and political relations concerns overrode basic courtesy to Concentrix staff, many of whom were blameless.’

Technical grounds

The report concludes that HMRC monitored Concentrix decision making on narrow technical grounds, and that on those terms it was satisfied the contractor was doing a good job. It recommends that if any future outsourcing deals are signed, there should be a clear expectation that services will be at least as good as those provided directly.

The report states: ‘While HMRC had a responsibility to ensure their contractor acted fairly and properly, it is clear that their overriding priority was the maximisation of expenditure savings.’

It recommends that HMRC should review all summer 2016 Concentrix decisions not already appealed, and says the government should commission and independent ‘root and branch’ review of tax credit decisions before any further Concentrix-style compliance drives.

Frank Field, chair of the work and pensions committee, said: ‘The committee was horrified to learn of the “cut first, think later” approach that was deployed by Concentrix. Our horror was compounded by the company’s — and HMRC’s — apparent celebration of its “strike rate” in cutting families’ tax credits. The damage caused to families’ living standards by this strike rate is still being felt by my constituents needing to rely on food banks while their claims are reinstated.

‘Despite their protestations to the contrary and contrite performance before our committee, HMRC was negotiating renewal of Concentrix's contract until just four days before they announced otherwise and when they were well aware of the failings. They only pulled the plug under public, parliamentary and media pressure.’

An HMRC spokesperson said: ‘HMRC is absolutely committed to paying tax credits to everyone entitled to them quickly and accurately. We apologise to all those who were let down by our contractor.
‘We took swift and decisive action to end the contract early and took back all outstanding cases which are all now resolved. If claimants are entitled to tax credits they are now back in payment.
‘We have made it clear that tax credit error and fraud checks, which play a key role in making sure that people get what they are entitled to, will in future remain in-house.’

The work and pensions committee report on Concentrix’s handling of tax credit checks is here.