The Work and Pensions Committee has today published a report condemning HM Revenue & Customs and credit checking firm Concentrix for their "gross failure of customer service".
The report says that HMRC and Concentrix were complicit in a decision-making process that resulted in thousands of claimants having their tax credits unfairly stopped, resulting in a situation that "left vulnerable people in humiliating hardship".
Concentrix had been tasked to look into 5.5 million tax credit awards and of these had to "identify in the region of two million cases... forecast to contain tax credit fraud or error", according to the now-ceased contract with HMRC.
The three-year contract, which started in May 2014, had been worth between £55 million and £75 million and worked on a 'payment by results' basis. HMRC terminated the contract with immediate effect on 11 November 2016, although the Work and Pensions Committee report stated that HMRC was negotiating a new contract with Concentrix as late as 8 September.
HMRC says the amount it paid to Concentrix over the life of the contract was around £32.5 million.
What went wrong?
MoneySavingExpert.com first reported in September that Concentrix had faced a catalogue of complaints, with many claiming payments had been cancelled at random, letters had gone missing and tax credits had been withdrawn without the required 30 days' notice. This had left many claimants without cash for vital household bills.
The Work and Pensions Committee says a flawed decision-making process "left vulnerable people in humiliating hardship" while Concentrix and HMRC targeted "strike rates" of benefits being removed.
Around 90% of those decisions were overturned on initial appeal, yet in many cases people lost benefits for months, being forced to borrow money and use foodbanks to survive.
The Concentrix call centre completely collapsed in August; fewer than 1% of calls were answered within the target five minutes on several days in the middle of the month.
HMRC's own monitoring systems failed as they took more than three weeks to escalate severe problems to senior staff.
What did the committee's report find?
Key findings and recommendations within the 90-page report can be summarised as follows:
- "Cut first, think later" attitude plunged claimants into "humiliating hardship" and debt.
- "Guilty until proven innocent" approach saw 90% of initial appeals upheld, with high human cost of errors, yet HMRC pressured Concentrix to find even more cuts.
- A thorough review by HMRC should be conducted of all summer 2016 Concentrix decisions not already appealed.
- An independent "root and branch" review of tax credit decisions should be commissioned by the Government before any further Concentrix-style compliance drives.
The full report can be downloaded from the Parliament website.
What does Concentrix say?
A Concentrix spokesperson said: "We welcomed the opportunity to engage with the Work and Pensions Select Committee in its inquiry. This was a hugely complex contract and programme, and as the Committee has highlighted, a number of challenges and issues emerged at the outset.
"We welcome any further investigations into the contract, including the National Audit Office investigation, to ensure all lessons can be learned."
What can I do if I was affected by the whole shambles?
If you had your tax credits wrongly stopped by Concentrix, you may be able to claim compensation on top of backdated payments.
We have the full details of this in our Concentrix compensation MSE News story.
What happens next?
HMRC has committed to not use further private contractors to make benefit decisions.
The National Audit Office (NAO) is also investigating – if you'd like to offer evidence, you can email it at firstname.lastname@example.org, putting 'HMRC's contract with Concentrix study' in the subject line. The NAO has said that while it will consider all evidence provided, it may not be able to respond.