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potential effect on other HMRC services, take urgent action to compensate people who have erroneously had tax credits withdrawn by the company, and in doing so mitigate any adverse effect or reduction in service for claimants.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.
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?
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.
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.
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.
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?
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.
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?
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.
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?
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.
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.
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.
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.
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.
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?
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.
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.
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.
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?
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.
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?
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.
Will the hon. Lady give way?
Will the hon. Lady give way?
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.
During the past few weeks, there have been a number of debates in this House about the quality of service provided by Concentrix in helping HMRC to counter fraud and error in our tax system. This is an important opportunity to debate the issue again, and I hope to go a little further in providing the House with information.
It is right that we have debated the issue because during the past few months it has become clear that Concentrix, despite the best efforts of the majority of its frontline staff, was failing to meet the standards we expected and, indeed, that we had specified in its contract. This meant that many of the people whose tax credits were being investigated—we have heard about them in the speech by the hon. Member for Salford and Eccles (Rebecca Long Bailey) and in interventions, and they include my constituents—have been caused needless frustration and distress in resolving their cases. I suspect we will hear more examples as the debate unfolds. I intend to address the specific points in the motion, but as the hon. Lady accurately speculated, I may need in due course to write to her about aspects of the contractual arrangements, for reasons that may become obvious as I go through my speech.
Before the Minister leaves the human suffering aspect of this debate, may I welcome the speed with which she has responded to the letter and memoranda of cases that I, like other Members, have submitted to her? If we are not only talking about learning lessons from the contract, may I ask how we can quickly get compensation to the people who have been adversely affected? Will she give an undertaking today—she may have such an undertaking in her speech— that people whose benefits have been cut by Concentrix will be informed of the hardship fund that she has established so that they can quickly apply for help?
The right hon. Gentleman is right to anticipate that I will touch on that issue. I will reflect on his point. I do not know about the arrangements for being proactive in telling people, but there are arrangements in place. When I get to that point, he can let me know if he does not think they are adequate.
Given that so many hon. Members on both sides of the House have made such efforts to support their constituents during recent weeks—the human aspects of this issue are absolutely uppermost in our mind today—I should bring the House up to date on the action taken to rectify the situation. As I informed the House last month, we decided on 13 September not to pass any new cases to Concentrix. Instead, it was intended that it should concentrate on resolving outstanding cases. HMRC staff stepped in to reinstate a quality customer service, such as making sure that people could once again get through on the phones. We know how critical it is for people to be able to get through and have their voice heard.
On 14 September, when the Minister answered an urgent question in the House, she told all our constituents to phone the number they were given. One of my constituents phoned the line that day and waited for ages to get through, only to be told, “Because of all the complaints you’ve been making, we’re getting sacked”, and the phone was put down. Does she agree that that added further to the already deep distress that people were feeling, and that it is not acceptable?
Of course it is not acceptable—not at all. I would add that, as hon. Members may be aware, the opening hours of the MPs’ phone line have for some weeks been extended to cope with the larger number of calls coming through that route.
In her response to that urgent question, the Minister reassured the House that queries would be dealt with within four working days. We know that that simply is not the case, and many of my constituents have been waiting for weeks to hear back from Concentrix or HMRC about their tax credit award. Will she update the House about the deadline for dealing with these cases?
I will come on to that, but the hon. Lady has provided me with an apt moment to be clear about what I said on that day. I said that once we had established the facts of the case, people should be paid within four working days. Clearly, some cases are complex and need further details to be provided. In response to the urgent question, I said that once we had established the facts, an automated process would authorise payment to be made within four working days. That is the timeline to which HMRC is working.
As I have said, it is absolutely critical that we get the right information, establish the facts and get payments started again. To that end, HMRC took back from Concentrix 181,000 incomplete cases, and staff have been working hard to resolve them. I can update the House by saying that 178,000 of the 181,000 cases have already been finalised, which represents 98% of them. HMRC has already written to the people concerned in the other 2% of cases, and it should conclude those cases by the end of this month. I want to place on the record my thanks to HMRC staff for their efforts in that regard. HMRC staff are also taking on reviews that are requested of any decision made by Concentrix.
It is startling that 98% of cases have been resolved within four weeks. Is there any evidence whatsoever that there were grounds to pursue people over their tax credits in those 98% of cases, or was this a bogus fishing expedition, as all of us in the House are likely to believe?
It is important to recognise that when a case is resolved, it means that a conclusion has been reached based on the facts. I cannot give the House the breakdown of cases in which payments have been reinstated, cases in which there was in fact an error in the claim that had to be corrected, or indeed cases—a very small number of them—in which claims were fraudulent. The point is that the cases have been resolved according to the facts provided and in the knowledge of the person concerned. We may be able to provide a breakdown at some point, but I am not in a position to do so today.
The House would find it especially helpful to know to what degree Concentrix was steered by the Government towards looking for undeclared partners, and to what degree the contract incentivised Concentrix to jump to conclusions?
I will come on to that.
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.
On that specific point, my constituent Katy Holness successfully challenged an erroneous Concentrix investigation. HMRC wrote to her saying that she would have £100 compensation but warning her that that £100 might in itself trigger an overpayment. What does the Minister say about that?
It is very difficult for me to comment on a specific case, but if the hon. Gentleman writes to me with the details I will ask HMRC to comment on it. We held a further drop-in on 19 October, and if the House feels it would be useful to hold another such Member drop-in for cases such as that to be resolved face to face, I am very happy to arrange one. If hon. Members are aware of people in hardship—I know many are—they can bring that directly to our attention. In fact, I am grateful to all those Members who have already taken action of that kind and attended the various drop-in sessions I have organised in the House. I remind everyone that there is a special hotline for MPs to raise issues and seek information, and we have allocated extra staff to make that service available over extended opening hours. We will address any such cases with the greatest of urgency.
We are making some progress towards at least putting an end to the distress and worry that some people have regrettably faced in recent times. Mechanisms are in place to make sure that anyone in hardship as a result of uncertainties or mistakes will be supported. Those two things have been our top priorities.
Will the Minister tell us where the duff information that has been acted on by Concentrix has come from? One of the key things about these cases is that the information upon which people’s claims have been cancelled has been almost universally poor and nonsensical. Where have those data come from?
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—
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.
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.
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.
I will take some interventions, but before I do I must say that, as the House would expect, while those commercial discussions are ongoing I cannot provide full details of the negotiated early exit; however, I expect it to be finalised shortly.
I will give way to the hon. Member for East Antrim (Sammy Wilson), because he has been waiting a long time.
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?
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.
I also welcome the statement that we are terminating the contract with Concentrix. That is absolutely the right thing to do. I have a number of constituents who have suffered these problems. Mr and Mrs Young from Malton provided evidence that they were married. Despite that, Mrs Young was identified as unmarried and living in Whitby on her own. Members of Parliament have the emergency hotline—I have used it—and people can get emergency hardship payments. Does the Minister welcome that and should we make it more publicly known that those measures are available for people in hardship?
That is exactly right, and today’s debate is timely as it allows us to focus on that. I am now going to give way to the hon. Member for Sheffield, Heeley (Louise Haigh), who has done so much work on this matter.
I am grateful to the Minister for giving way—she is being very generous. As we have heard, the contract altered last year. Will she confirm how the contract was altered last October, and that it was altered because Concentrix was unable to make enough money out of it before then?
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.
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.
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.
I will take one more intervention. I have not taken one from—
Will the Minister give way?
Well, I have not taken one from my hon. Friend, but I will take one from the Scottish National party and then I will progress to the end of my speech.
I understand, with the challenges coming from the Opposition Benches, why she wishes to outsource blame purely to Concentrix, but this Government wrote the contract to incentivise Concentrix’s behaviour and, as confirmed by the Economic Secretary last week in Westminster Hall, sent the personal data to Concentrix to investigate—
Order. We are tremendously grateful to the hon. Gentleman, but I feel that he has surely concluded his intervention.
Far from saying that this is all Concentrix, I think there are lessons to be learned all round. I should signal now that, because I think there are lessons to be learned all round—for HMRC, for Ministers and certainly for Concentrix—the Government do not intend to divide the House on the Opposition’s motion. I want this to be an exercise in understanding the problems and learning the lessons. I will take one more intervention, for balance from my hon. Friend the Member for Kingston and Surbiton (James Berry), and then move on to the end of my speech.
I have two Concentrix cases from single mothers, one of whom was required to disprove a relationship she plainly never had with a former tenant of her house, evidence she could not possibly provide. Does my hon. Friend agree that what is important now is that the Concentrix contract has been ended and a system for investigating mistakes and a hardship fund have been put in place? That is what is important.
My hon. Friend rightly brings us back to the human factor. He is right to highlight that the heart of what we want to do is to get people back in payment, where they should be, and to relieve hardship. I will now move quickly towards the end of my remarks. Mr Speaker has been very indulgent.
Among the discussions happening at the moment, HMRC has agreed to the transfer of Concentrix staff to HMRC. Concentrix has begun consulting its staff on this point and anyone transferring to HMRC will be supported through further training to help us deliver a quality public service.
It is also right, as the motion suggests and the shadow Minister challenges, that we look long and hard at what went so wrong with Concentrix’s performance. Not only do we owe that to all those who were caused worry or distress as a result of these failures, but it is also of huge importance that we learn from what happened and prevent any similar issues arising in any future contracts across government. That is why HMRC will be looking at how the contract with Concentrix was managed. It accepts it has lessons to learn. It has given evidence to one Select Committee already and will be giving evidence to at least one other—learning lessons and undertaking analysis of the claims.
Members will be keen to see an unbiased, independent assessment. As has been alluded to already, the independent National Audit Office, which scrutinises public spending, has announced it will be conducting an inquiry into the Concentrix contract. HMRC will work and co-operate with the NAO very closely to support that inquiry. The investigations will undoubtedly include, as the motion suggests, a consideration of the knock-on effects that may have been caused to other services provided by HMRC. As I have outlined, HMRC has needed to deploy extra staff to address the problems encountered, but I reassure the House that it is currently managing the increased workload effectively. Again, that is a testament to the efforts of its staff. It is also a reflection of the flexibility HMRC possesses. It is a large organisation capable of moving staff around quickly and dealing with peaks of demand, which it is accustomed to handling at various points in the year.
During the debate we have touched a number of times on the point about mitigating suffering. As I set out, our first course of action is to ensure that we get people’s tax credit claims back on track. HMRC is working hard to get the information needed from claimants to put anyone entitled to tax credits back into payment, including paying any arrears to which they are entitled. In parallel, HMRC is taking forward any requests for reviews of Concentrix’s decisions. Indeed, many decisions have been overturned. I have made inquiries and it is fair to say that, largely, they have not been due to original errors, but have followed the provision of additional information that has been obtained through the process of the mandatory review. So many of these problems have been caused because people did not, or were not able to, respond to the first timetable they were given. They have now provided that information—the hon. Member for Garston and Halewood (Maria Eagle) asked about this earlier—and we have been able to reassess their claims.
We have also made it a priority to address urgent cases of hardship through the usual mechanisms, but I will look at the point made by the Chair of the Work and Pensions Committee. If anyone has been caused undue distress or financial loss following errors or wrongdoing by Concentrix, they should contact HMRC. Such complaints will be taken very seriously, with a thorough examination of all the evidence. Where mistakes have been made, HMRC will not only make sure claimants are now being paid correctly, but pay compensation where appropriate.
It may be helpful for colleagues to know that I have asked to be told on an ongoing basis the issues that Members are bringing up with HMRC. Someone used the phrase “early warning signal”. Members’ complaints—Members from both sides of the House have been assiduous in representing their constituents—are a very good early warning signal for when things might not be right.
In conclusion, it is undoubtedly the case that there remains too much fraud and error in the tax credits system. It is a complicated system and it is very easy for many honest people to get it wrong. Error and fraud stood at £1.37 billion in 2014-15, so it is right that the Government—any Government—are determined to spend taxpayer money sensibly and sustainably, and take action to address that. We want to ensure that those who are entitled to tax credits get them, but, as we all know, it is vital we prevent overpayments that will then need to be paid back. We have all seen the enormous distress that this causes to vulnerable people. Often, just through not supplying the right information and getting muddled up about a form, people end up owing a lot of money, and that causes a lot of distress.
Progress is being made. Error and fraud in the tax credit system are now close to their lowest levels since its introduction in 2003. We are not going to take a step back in our efforts to ensure we have a fair tax system that tackles non-compliance in all its forms. We announced an extra £800 million in funding last year to do so, but that has always got to be balanced by the need to keep providing both the financial support and quality customer service that people, whatever their income level, are entitled to. On this occasion, the balance was not appropriate. It is for that reason we have taken the action I have outlined to put the situation right. We want to support people who are struggling with their claims and we want to reinstate payments to those who are entitled to them.
I am sure that many of the comments that have been made so far, and will be made in the debate that follows, will be fair. I will not agree with all the points made, but there has been much fair comment. For that reason, we will not oppose the motion. Above all, we want a fair outcome for everyone affected and we want to learn important lessons to ensure this sort of thing does not happen again. We must ensure that these important public services work for the most vulnerable in our communities.
Before I call the next hon. Lady, it will be obvious to the House that there are a great many Members who wish to speak this afternoon. We will start with a voluntary time limit of eight minutes for Back-Bench speeches. If that does not work, I will impose a time limit of eight minutes. This time limit, voluntary or otherwise, does not, of course, apply to the spokesman for the Scottish National party, Mhairi Black.
The Scottish National party will fully support Labour’s motion. I thank the hon. Member for Salford and Eccles (Rebecca Long Bailey) for making the case so eloquently, but I think it is worth while reiterating some key points.
HMRC gave the contract to Concentrix, with the
“additional capacity to review and correct tax credit claims that are potentially based on incorrect information.”
One of the main tasks of Concentrix was to find people with an “undisclosed partner” and to see whether they were claiming the benefit as a single person but actually living with others. That is where the problem really begins. Concentrix spent a considerable amount of money putting out “fishing” letters to try to catch people claiming fraudulently. In a written answer on 7 September, the Treasury Minister said that Concentrix sent out 381,000 letters to tax credit claimants requesting proof of single status; 254,000 letters asking for details of hours worked; and 312,000 letters asking for evidence of childcare use.
Concentrix’s logic was that, unless people replied with the appropriate evidence, their tax credits would be stopped. However, despite all those letters apparently being sent out, thousands of people had absolutely no idea they were being investigated. Quite often, they did not know that they were under investigation, or that their tax credits had been stopped.
Given the clampdown on supposedly fraudulent claims with these fishing letters, would it not be good to see the same rigour applied to aggressive corporate tax avoidance?
I agree entirely. That is something I will touch on later.
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.
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.
Does the hon. Lady share my frustration about the fact that a constituent of mine who was down to her last £5 was told to send documents to Concentrix by recorded delivery? She then had to decide whether to feed her child or to send those documents. I am sure that the hon. Lady will agree that that is absolutely horrific.
It is actually completely disgusting for this to be happening under the watch of Government. It is also worth remembering that, when we talk about these horrendous individual cases, they are not unfortunate or rare examples—it is happening throughout the UK. Whoever made the music that is played when people are put on hold by Concentrix must be making a fortune, because my entire office can whistle it off the top of their heads, we were kept on hold for so long—and that was on the MPs’ hotline. The fact that people who do not have access to that hotline are sometimes having to spend up to 90 minutes on the phone is ridiculous.
I wonder whether other colleagues have shared the experience of my staff. Concentrix just flatly refused to deal with them, saying that it would speak only to the MP. We are only there one day a week, and that might be when it is not easy to take the history from the constituent.
It is also worth remembering that the number people were asked to phone was an 0845 number, so it cost an absolute fortune. I think that anyone in the Chamber would find it cost a fortune, so imagine how much pressure that will put on someone who already qualifies for tax credits, but has been told that they will not be receiving them.
When we in the office did get through, we were told that people had to apply for mandatory reconsiderations, only to discover that the contract also delegated extensive decision making powers to Concentrix, including the processing of mandatory reconsiderations. So this private company has to investigate itself to find out whether it made the correct decision. We should bear in mind the fact that the contract states that it should be paid only on the basis of results. The entire contract has been a shambles; it has been ludicrous from the start.
As if all that were not bad enough, during the evidence session with the Select Committee, Concentrix admitted that 90% to 95% of all mandatory reconsiderations were upheld. The company was openly admitting that it got it right only 5% of the time. These are the people who have applied for an appeal. How many people have had their benefits stolen from them who have not gone for a mandatory reconsideration?
It is kind of the hon. Lady to let me intervene. It is worth saying that often the reason the mandatory reconsideration succeeds is that the information previously requested has been supplied to that timetable. It is not fair to say that the reason is because the previous decisions were always wrong. Sometimes the information requested has at that point been supplied and then the correct claim can be instated.
I appreciate the Minister’s point, but we need to remember that HMRC and the Government were supplying information to Concentrix, so a lot of the fault lies with the Government.
I was talking earlier about Government responsibility—before Mr Speaker rightly encouraged my pithiness. Does my hon. Friend agree that the only way for the UK Government to take proper responsibility is not only by providing substantial and appropriate compensation, but by offering full apologies to those constituents who were wrongly dealt with by Concentrix and this Government?
I could not agree more.
Concentrix was saying that 95% of mandatory reconsiderations were upheld, but in the next panel before the Select Committee, the chief executive of HMRC said that it was not as bad as 95% and that 73% were upheld. He said that as though it was some kind of problem that—
I want to make some progress.
It is such a farce that the Government and Concentrix cannot even agree on how many times they got it wrong. It is a ridiculous situation to find ourselves in. Meanwhile, people are having to go to food banks and to go home to their crying children, who do not want to eat Tesco’s 80p Bolognese for the fourth time that week.
I appreciate that mistakes can happen in all walks of life, whatever job one is in, but the reality is that, when the mistakes are made by Government, it is people who suffer—and often it is the most vulnerable people. Although we wholeheartedly support Labour’s motion, we have to highlight the fact that the Government have to bear some of the blame. The contract itself states that HMRC is required to monitor the exercise and remains responsible in law for the actions carried out by the contractor. I do not believe that the Government have done that adequately.
The most damning thing in this entire saga is that Concentrix was under the impression that its contract was going to be renewed. Only after the media cottoned on to this and began writing about it, and after 670-odd formal complaints were put in by elected Members to HMRC, did the heat begin to be turned up and the issue begin to be taken seriously. The vice-president of Concentrix said he was initially given only 15 minutes’ notice, before he went on a flight, that the contract was not going to be renewed. He pleaded with HMRC to be given an hour in order to inform staff. An hour was the difference between Concentrix thinking it had a contract that would be renewed and the contract being taken away because of its shambolic work. The level of incompetence is truly incredible. We cannot ignore that and place all the blame on Concentrix.
So what needs to be done now? The hon. Member for Greenwich and Woolwich (Matthew Pennycook), who is no longer in his place, mentioned the £100 hardship payment, but in all my cases constituents have been told that the £100 will be taken back off their benefits. That has to be looked at. If we are all being told that at the same time, that is clearly an issue.
As for how we should deal with the overall problem, the buck has to stop with HMRC. The Government must bring services of this kind back in house, and they must once again be the Government’s day-to-day responsibility. Saying to a private company “We want you to make £1 billion worth of cuts, but we will only pay you on a results basis” is a recipe for disaster. We have to legislate so that this is never allowed to happen again. One of the main reasons that it occurred in the first place was the lack of resources and Departments’ inability to cope. The Treasury must reconsider its ongoing policy of downsizing HMRC, especially when we are in the midst of such a cataclysmic problem.
As has been said by a number of Members today, and on another occasion by my good and hon. Friend the Member for Lanark and Hamilton East (Angela Crawley), the Government must apologise to people. There is no shame in apologising and admitting that you got it wrong. The Government need to regain a bit of trust from the people who have been hurt. Concentrix is by no means innocent of any of what has happened, but ultimately it was HMRC that signed the contract: it happened on HMRC’s watch.
Conservative Members will probably roll their eyes and stop listening when I say this, but the biggest problem that I have with issues like this is that the Government seem to be perpetuating an overarching culture of blaming the poor. We treat people with suspicion from the start, and the onus is always on individuals to prove that they are not thieves or frauds. Pressure is put on people who have enough to deal with already. I have sat through many debates of this kind, and I have heard certain groups—disabled people, pensioners and those on low wages—being constantly targeted. We end up pitting them against each other. We tell young people “You cannot get a job because pensioners are living too long”, and we tell the disabled “Sorry, we cannot afford to pay these amounts any more, so we will have to cut £30 from your benefits.” All the while, at the heart of all that, there is a small group of people who are wealthier than ever before—and I have to say that I include every elected Member in the Chamber in that category. We were all given an 11% pay rise; who else was? Who in the outside world has seen that kind of pay rise?
Will the hon. Lady give way?
I am going to finish soon.
Recently, Philip Green gave evidence to the Work and Pensions Committee. Here is a guy who has lost £570 million worth of pensions, 22,000 pensioners have been affected and 11,000 jobs have gone, yet he is still able to go off to the Greek islands on his £100 million yacht. That is not the kind of society that many us want.
Let us not forget that, despite this whole saga and despite all the horrendous stories that we are hearing, Concentrix will still walk away with millions of pounds as a result of the work that it has already done: I believe that the most recent figure is £27 million. This is a culture for which the Government must be responsible. Although only 0.8% of benefits are fraudulently claimed, the general public seem to think that one third of them are. The Government have not just a responsibility to look after people, but a responsibility for the language that they use—for the rhetoric—and also for the culture that they set.
I know that what I am saying will probably not convince Conservative Members. This may be an unconventional suggestion, but I want them to go and see a film called “I, Daniel Blake”, which will give them a cold and sobering view of the reality that so many people are experiencing. The film rightly makes it clear that, when we debate matters such as this, we are not talking about service users, claimants, or national insurance numbers on a Concentrix computer screen; we are talking about citizens—your citizens. We are talking about people here, and they deserve to be treated with a lot more dignity and respect than they have been.
In her first statement as Prime Minister, Theresa May made this promise in Downing Street:
“If you’re from an ordinary working class family, life is much harder than many people in Westminster realise… When we take the big calls, we’ll think not of the powerful, but you. When we pass new laws, we’ll listen not to the mighty but to you. When it comes to taxes, we’ll prioritise not the wealthy, but you.”
My last question to the Government is “When?” There are people with absolutely nothing. When will the Government prioritise the people who need them most? Lord knows, those people are losing both patience and hope.
It is a pleasure to follow the hon. Member for Paisley and Renfrewshire South (Mhairi Black). I welcome the debate, and the opportunity that it gives us to talk about the issues involved in the Concentrix contract, although it is worth noting that it is a month since our exchanges in the House about the Government’s intention to cancel it.
I believe that our goal should be to ensure that the people who pay for the benefits system through their taxes can be confident that fraud and error are kept to a minimum. However, that went badly wrong in this instance, and examples in my constituency reveal some of the places where it went wrong. The hon. Member for Paisley and Renfrewshire South gave us the interesting example of a “philandering shop” in Scotland. In my constituency, someone had supposedly moved in with a bloke living down the road. They rang Concentrix to try to deal with the matter and get some answers, but found that it was quicker to walk to my office with the phone—while still on hold—and sit there for about 20 minutes while we made them a cup of tea and enjoyed the “hold” music that they were listening to. To prove that this had happened, I took a photo of the phone as it went through the hour on hold in my office.
To be fair to Concentrix, it did only take four minutes to tell my constituent “Actually, you should ring HMRC”, but that was the only part of the customer service that was particularly speedy. The only other remarkable thing is that, given the level of concern and the number of issues that have been raised by Members and others, Concentrix was itself surprised to be told that the contract would not be renewed.
Does the hon. Gentleman agree that our constituents deserve an apology for the way in which this matter has been handled not just by Concentrix, but by his party’s Government and HMRC?
The focus should be on what went wrong, waiting to see what the National Audit Office comes up with—I shall say more about that shortly—observing the reaction to that and dealing with the issues, rather than getting into a debate about whether the gesture of an apology should be made. That said, I am pleased that the Government are not seeking to nit-pick the Opposition motion, that we are not going to divide the House, and that, effectively, we will support the motion. That, I think, speaks for itself.
In the light of the problems that had been raised with me, I welcomed the Government’s action in making it very clear that the contract would not be renewed. It is over a month since the last new case was sent to Concentrix. I am also pleased that HMRC is moving in to resolve many of the issues.
Will the hon. Gentleman give way?
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”.
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.
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.
Is it not clear, then, that the approach over past years of reducing HMRC staff numbers must stop, and stop today? The current Government programme to reduce staff numbers from 55,000 to 35,000 is short-sighted, and from the evidence we have heard today it is clearly time to reverse that.
I encourage the hon. Gentleman to read the HMRC report being discussed this afternoon by the PAC; it might be worth his attending the session if he gets the chance. It is worth noting that with new leadership, which has been needed for some time, HMRC is starting to turn around its customer service, by moving more staff into dealing with post, for example. There is some evidence that the customer service is improving, therefore, which is welcome, although I know that some of these assertions will be robustly tested by a number of Members, including the hon. Gentleman’s party colleague and PAC member the hon. Member for Coatbridge, Chryston and Bellshill (Philip Boswell).
It is vital that the investigation is full and that we look at what comes out of it. I welcome the Minister’s saying that there is an ongoing negotiation about concluding the contract early. We cannot go into the details of that today for obvious reasons, but I hope the work being done to bring this whole sorry tale to an end will be shared with the NAO as part of its inquiry.
One of the conclusions to be drawn is that it is clear that people have been caused pain and suffering that they should not have been caused. People have been subjected to allegations that were flagrantly untrue: the “philandering shop”; the person living down the road; someone who has been dead for some years. We should think about the way the contractor went about things—sending letters with the contractor’s logo that looked very similar to official Government or HMRC letters. We might have debates about whether in future the symbol of the Crown and HMRC should be used on a letter sent by a contractor.
Many of the constituents who came to me did not appear to have received a letter at all. A letter with some strange logo on it might not register as being what it is about and therefore might get overlooked.
I understand that point, but the evidence from my constituency case load is that it cut both ways. Some people saw a logo that looked like it was from HMRC and wondered what the letter was about. This matter might require further inquiry, and we should consider the information that the NAO will bring forward. The NAO does not just look at the sums. It is not just going to work out how many people got paid for what. It will also go into the detail around the customer service, and certainly in previous reports it has been extremely thorough when doing so.
I welcome the overall tone of the Minister’s response to this motion, and I welcome the fact that the Government took clear and decisive action to bring this contract to an end and are continuing to do that and to prevent more people from having to experience the issues many Members have highlighted today. I hope the monitoring will go on because, as we have seen with past issues to do with HMRC, an in-house solution is not necessarily a magic bullet to achieving amazing customer service. We have only to look at past debates on HMRC’s performance to see that. I welcome some of the tone of today’s debate, but it is now absolutely clear that we need to resolve the outstanding cases, let the NAO do its work and then form our conclusions based on the evidence it brings to us.
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.
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.
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?
Today’s debate is primarily about the HMRC contractor, Concentrix, the delivery of its contract, its customer service and the impact of its work on those receiving tax credits who were wrongly suspected of fraud or error. The hon. Member for Stretford and Urmston (Kate Green) made some valid points about her constituents who have been affected, and other hon. Members have spoken equally movingly about some of theirs. The debate is about more than that, however. It is about the relative value, efficiency and service of third-party contracts as against the direct delivery of services by the Government or by Government agencies. It is also about how the Government—in this case, HMRC—reacted to the unexpected crisis when mandatory reconsideration appeals rose by 95% in August while the “success” in handling calls dropped off a cliff. It is about how quickly contingency plans were put in place, and what those plans were. It is also about whether the structure of the incentives and the contractor’s commission were appropriate for this type of public service delivery.
It is too early to offer definitive answers today, while the internal investigation is still going on. However, the inquiry by our Work and Pensions Committee and the measured comments from the Financial Secretary to the Treasury today offer some clues. To this, I add my own experience as an MP dealing with constituents who have been affected, and the observations that we made in the Select Committee.
The first point has to be that the goal of reducing HMRC’s estimates of fraud and error was the right goal for the Government to have. The 2014-15 estimates, which are the most recent ones, suggest a net £1.2 billion of fraud and error on tax credits, potentially involving 500,000 people. The Government cannot spend billions of pounds of taxpayers’ money on welfare without ensuring that it is spent properly, just as we expect the Department for International Development to ensure that its accounts are correct and its money is spent in the right way. We also expect the European Union to account correctly for the money it receives from its taxpayers, including our own.
The hon. Member for Paisley and Renfrewshire South (Mhairi Black) is absolutely right to say that rich people, and every company, should pay the right amount of tax. I would add that this is not a case of either/or. It is a case of both. The Government were absolutely right to increase HMRC’s resources for collecting the right amount of tax from those who have tax to pay and to ensure that the right amounts of welfare benefits are received by the right people. It is worth noting that the £270 million recovered through this programme will make a decent contribution to reducing fraud and we must ensure that it is made available to the people who need it most.
Secondly, there has been a cost during this process to our hard-working, not-well-off constituents. In each of the dozen or so cases that I or my office staff have replied to, there has been a degree of hardship and, in some cases, considerable hardship. HMRC’s response to such cases is therefore important. My sense, from our Select Committee inquiry, is that HMRC’s chief executive, Jon Thompson, is looking at how quickly HMRC has responded. It is true, however, that the moment HMRC took a grip, beefed up resources and put extra staff on to the MPs’ hotline, my office—and, I suspect, those of other MPs—was able to resolve these tax credits cases very fast. I am unsure whether all the cases were resolved within 48 hours, but all were done within three or four days, and some within a few hours. Indeed, the Work and Pensions Committee Chairman, the right hon. Member for Birkenhead (Frank Field), said that he could not
“recall an experience where, thank goodness, the Executive, whether Government or delegated, has acted so quickly when they have seen a crisis.”
That should be on the record. It is credit to how HMRC responded. In the evidence we took from affected people, there was one particularly gracious “thank you” to HMRC for resolving one individual’s crisis so quickly.
My third point relates to contracts to third parties and the incentive system within them. The National Audit Office recognised this as a complex area, and the jury is still out on how successful the system has been over the past few years. HMRC’s chief executive responded to my question on that with an interesting remark about
“the balance of incentives on third parties in these kinds of contracts”
“is essentially based on commission earned.”
“Is that the right kind of incentive mechanism for this kind of public service delivery?”
It is a valid question, and other Members have mentioned it. The HMRC chief executive reflected on it. I also have no doubt that the NAO investigation will discuss whether bringing this sort of contract in-house would ensure better quality control, more experience of handling citizens who are on tax credits, and possibly even a reduced cost. From the evidence to the Committee, it broadly looked like Concentrix will have been paid about £27 million by the time its contract comes to an end on £270 million of fraud or error identified, implying a 10% commission. That feels high, but the figures are probably hypothetical at this stage and will need to be confirmed in due course by the investigation.
In all of this, the Government, HMRC and Concentrix have been absolutely right to start with an apology to those who have suffered. When mistakes are made, it is important that they are recognised immediately. HMRC and Concentrix started the Select Committee sessions by making their apologies—the Minister has added hers on more than one occasion—and that was important. There is the issue of compensation for those most affected, and the fact that, as the amendment states, the Government should “ensure that those people”—people on tax credits—
“are treated by HMRC in future with dignity and respect.”
That should happen all the time for everyone with whom the Government deal, particularly where monopolies such as HMRC exist. We all have a duty to treat our constituents with dignity and respect. That is what happens most of the time. My experience is that HMRC is helpful on every occasion with constituent issues.
In conclusion, today’s debate has been measured and the tone has been reflective and thoughtful across the House. Clearly, there are lessons to be learned. It is correct that tax collection is done, that welfare benefits are spent in the right way on the right people, that mistakes are responded to rapidly and that agencies such as HMRC should hold contingency plans. Poor service should be treated and amended as quickly as possible. I therefore welcome this opportunity to discuss some preliminary thoughts on the lessons that can be learned and I look forward to the NAO report in due course.
Although the hon. Member for Gloucester (Richard Graham) spoke for precisely eight minutes, the previous speakers did not, so I must now impose a formal time limit of seven minutes.
The Government have made it clear that the burden of austerity must be borne primarily by the most disadvantaged in our society. They made that clear through their repeated assaults on the welfare state, in their victimisation of the disabled, in their system of sanctions and in their attacks on benefits for our young people. They have made it clear that tax credits cost too much and are a drain on the public purse. They made it clear in their handling of the Concentrix contract that the suffering and hardship caused by this fiasco is not their concern. The Government did not seem to care about the indiscriminate targeting of single parents, the “fishing” letters, working parents being forced to give up their jobs, or families being forced out on to the streets as they lost their homes.
Strangely, none of those reasons was cited as a contributing factor to the withdrawal of the Concentrix contract. The statement given by the Financial Secretary to the Treasury explicitly said:
“Despite the best efforts of the staff manning the phones, Concentrix, with the high volume of calls in recent weeks, has not been providing the high levels of customer service that the public expect and which are required in its contract. HMRC has therefore given notice that this contract will not be renewed beyond its end date in May 2017.”—[Official Report, 14 September 2016; Vol. 614, c. 904.]
It seems that it was all about call handling. I am sure that I am not alone in having a list of constituents who are seriously out of pocket from waiting to speak to someone at Concentrix, but providing call waiting times as the main reason to ditch the contract is ludicrous.
This Government devised the model to target low-income families indiscriminately. The contract awarded to Concentrix was based on payment by results, creating a clear conflict of interest and encouraging bad practice. It was this Government, through HMRC, that supplied Concentrix with 1.5 million claimant records flagged as high risk—claimants like my constituent, Lauren. Lauren is the mother of two and a prime example of someone whom the system has failed, finding herself at the centre of a perfect storm. She suffers from anxiety and panic attacks and, despite having a line from her doctor, lost her job for being off ill. Her employer did not pay her statutory sick pay, and she was told that she would have to wait at least two weeks for employment support allowance. In a bizarre twist of fate, she found that both her working tax credits and her child tax credits had been stopped.
When Lauren first came to my office, she had no food and no money for gas or electricity. She had called Concentrix 48 times that day and had run out of credit on her phone. Rather than the state providing Lauren and her children with a safety net in their time of need, Concentrix had left them near destitute. Why? What was the key factor in determining that Lauren was one of the 1.5 million high-risk claimants? Someone had glanced at her file and decided that she could not possibly be working 16 hours a week and be paid so little. They had calculated her yearly income and then divided it, coming to the conclusion that she must have been working 15 hours a week, ignoring the fact that Lauren had spent a month out of work the year before—a change in circumstances of which she had diligently notified HMRC. A cursory glance was all it took to turn this young mother’s life upside down at a time when she was at her most vulnerable. My staff and I have been deeply affected by the number of cases in recent weeks in which people have been plunged into utter misery. We have felt sheer frustration at not being able to get a quick resolution. I doubt whether a single person on the Government Benches has ever experienced going without food.
We can stand here all day and trade stories like Lauren’s, and the Government can dish out platitudes and pat themselves on the back for acting so swiftly and decisively on the Concentrix contract, but that cannot detract from the fact that families have been driven further into debt and poverty by Concentrix’s actions. Families have been forced to beg for food by the actions of HMRC. Families are being forced to choose between heating and eating by this Government’s policies. It is time for the Government to accept their role in this fiasco and to step up and take some responsibility for the carnage they are causing in people’s lives. They must apologise for the hardship and suffering faced by people such as Lauren. They must look again at the ongoing policy of downsizing HMRC, leaving staff overworked and demoralised. They must introduce a freephone number for claimants and take on the costs of seeking mandatory reconsiderations. They must legislate to amend the compliance regime in respect of annual declarations and high risk renewals.
Earlier this month, leading figures from this Government stood up at the Conservative party conference right in front of a background that read:
“A country that works for everyone”.
Let us see them match their policy to that sentiment and step back from this destructive and failing drive to impose austerity on the many while allowing riches for the few. Those on the Government Benches should take a leaf out of the Scottish Government’s book and start treating people with fairness, dignity and respect.
I apologise for the state of my voice, but it is important that I speak in this debate on behalf of the many constituents who have contacted me about, and who are suffering as a result of, this scandalous Concentrix shambles. I commend the Opposition Front-Bench team for calling the debate, and particularly my hon. Friend the Member for Salford and Eccles (Rebecca Long Bailey) for her forensic analysis of what the Government could have got right when enforcing this contract and the problems that have led us to this point. I also commend my hon. Friend the Member for Sheffield, Heeley (Louise Haigh), who has done so much work to drive the debate forward. I also thank the staff in my office. We all have fantastic constituency staff who do so much to assist our constituents, and I particularly want to thank Shira, Lily and Ruba for the work they have done in dealing with a number of distressing cases involving individuals who have been in deep hardship and have been greatly upset. As my hon. Friend the Member for Stretford and Urmston (Kate Green) said, the people affected have often been single mothers. I also thank Citizens Advice and other local advice charities, which have been faced with a deluge of these cases.
I wish to reflect on a few of these cases. In one, a single mother had a long-standing claim suspended after Concentrix said that she was living with another named woman in her rented property. It was suggested that a third woman was also living at the property, but both were actually previous tenants of the home, one from as far back as 2010. The information had come from the electoral register, even though my constituent had lived in the property only since 2014. The claim was eventually reinstated. Another case involved a single mother and homeowner who had her claim suspended after Concentrix said that she was living with “a couple”. She is the sole owner of the property and had provided evidence to demonstrate that. Again, the claim was eventually reinstated.
The citizens advice bureau referred the case of another single mother to us. Her award was stopped pending an investigation. She was left with no income and we had to refer her to food banks, which is a deeply distressing experience for anyone. Her son is diabetic and requires a specialist diet, so that contributed to her stress and unhappiness. Again, that claim was eventually reinstated. A further case involved a single mother in work who had both her tax credit claims stopped after she was told by Concentrix that her half-brother, who had once sent post to the property, was in fact her partner. That case has not been resolved and she has been without money since August. I have two to four such cases, and I question some of the assurances that we have heard about how long it takes to resolve these cases. I have written to the Minister about a number of cases and we are contacting the helplines. I hope that she will assure us that she will fast-track some of these deeply distressing cases.
I am happy to give that assurance. Once again, I urge Members with particularly long-running and difficult cases to get in touch, and I will make sure that HMRC prioritises them.
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.
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.
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.
The hon. Gentleman mentions the problems with Atos and now we have Maximus. I know of a case of someone who has been waiting for a work capability assessment for almost six months. Can we not foresee that we will have a similar debate in another half year’s time?
I would not be surprised if we were to have that debate. I am frustrated by the Clearsprings case. People can see companies making a huge profit out of these contracts, and individuals making hundreds of thousands and sometimes millions of pounds, as a result of providing the most shoddy and inappropriate services. People suffer, but these companies often get away without so much as a slap on the wrist, and often with payments at the end. When people look at this, and particularly at HMRC, they say, “We are being chased down for these relatively small sums, completely erroneously, through these fishing expeditions, but then we see sweetheart deals with major corporations over their non-payment of tax.” This is not just about tax credits. Small businesses in my constituency come to me with complex VAT cases and say, “It is one rule for those at the top and another for us.” They are often put into severe hardship and face deep complications as they try to resolve these cases. By the time people arrive at the doors of Members of Parliament, they are often in severe financial difficulties, be that as an individual or as a business.
I want to be absolutely assured that the Minister will not just hold a full investigation into this case and resolve the issues for individuals in my constituency and others that we have heard about today, but will raise in government the wider issue of the contracting out of such services and how they are monitored because, in the end, it is the people of this country who suffer. The situation is not acceptable. This has been an absolute disgrace and it has to stop.
I am grateful for the opportunity to speak in this important debate. In common with other hon. Members, I have been appalled by the complaints that my office has received about Concentrix from worried constituents who have faced extreme hardship following its actions. I understand that a provider may want to conduct checks to ensure that money is provided to the right people, but stopping money to parents in this way while checks are carried out is wholly unacceptable. As many Members have said, Concentrix’s action has caused extreme hardship to many of my constituents and people across the country. People invariably use this income to provide food and essentials for their children, and it is totally unacceptable for them to be without that money for a period of time. As we have heard, the situation has resulted in many families relying on food banks—that has certainly been the case in my constituency—and in some cases people have been going without. This is utterly shameful.
It is not as though Concentrix has been quick about some of its checks; the majority of people seem to have had money withheld for two months or longer. How can people, many of whom are already on a low income, be expected to cope for long periods of time? One of the many cases my office staff have dealt with relates to a constituent who had her tax credits stopped because it was believed that she had an undeclared partner—we have heard similar stories this afternoon. Following much stress, and my constituent having to provide extensive evidence that she did not have an undeclared partner, it transpired that the basis of the action by Concentrix was out-of-date records of a previous tenant at the address. In a similar case, a constituent had her tax credits stopped because Concentrix required evidence that the tenant lived alone, as a random check on the electoral register had shown a previous tenant. It transpired that that previous tenant was now in prison. In yet another case, a constituent wrote to Concentrix to confirm and provide evidence that she was a single parent, yet it still took two months to investigate and reinstate the claim.
I could highlight a good many more cases, but I accept that a number of Members wish to contribute to the debate and that many of these cases are similar. The common factor is the lack of understanding or compassion on the part of the contractor engaged by HMRC. We know that many payments were stopped but that the decision was successfully overturned in around 90% to 95% of cases that went to appeal. Although Concentrix must bear its share of responsibility for the hardship that people have faced in recent months, HMRC, too, has to bear its share for allowing the situation to become such a mess. Does the Minister accept responsibility for the lack of scrutiny, and what lessons is HMRC learning from this debacle?
Concentrix’s failures have laid bare policy failures by the Government, because it certainly appears that, in this whole episode, there has been a deliberate attempt to target single parents. Again, if HMRC had been monitoring the contract, the situation might not have accelerated to the extent that we have seen. Lessons must be learned. Actions by Concentrix have caused extreme hardship and have completely lacked in compassion. As my hon. Friend the shadow Chief Secretary to the Treasury outlined, many of these cases have involved real suffering. People in Merthyr Tydfil and Rhymney and across the country deserve answers, and I look forward to hearing them from the Minister today. I thank the Minister for supporting the motion and for not seeking to divide the House this afternoon.
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.
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?
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.
I have spoken a number of times in Parliament on this subject, and every time I speak I listen to the many stories from across the Chamber and elsewhere about individual cases. My constituency is no different in the way that individuals have been affected by Concentrix, which is contracted by HMRC on behalf of this Tory Government As I said in my early-day motion 396, HMRC’s contract with Concentrix is driving families into immediate poverty.
Let me offer the House a few examples. One of my constituents who I spoke with had only part of her address held on the Concentrix system. When background checks were run on the address, a number of people were named as living at the same property. As a result of a needless investigation by Concentrix, this person struggled to feed and clothe her children for over a month. Another lone parent was judged to have made a false claim as a single parent. Following my complaint, it was discovered that an incorrect address had instigated the investigation and, in fact, HMRC owed this constituent a considerable sum of money. Sadly, this was not uncovered before the constituent had to give up her home due to financial hardship. Such cases reinforce the points that have been made in the debate.
Does my hon. Friend agree that another aspect of this shambles is the at times near-complete breakdown in communication between Concentrix and HMRC, as exemplified by my constituent Dionne Walker, a mother of three, who supplied Concentrix with every single piece of information it asked for, only to find out subsequently that Concentrix had not passed it on to HMRC? Her tax credit application was cancelled, leaving her having to seek crisis loans and go to food banks to feed her three children for the rest of the week. Does my hon. Friend agree that that is unacceptable, and that people such as Dionne Walker and countless thousands of others are owed an apology by this Government?
Indeed. I hope to hear such an apology from the Minister this afternoon. My hon. Friend’s example makes the point that I was about to raise—make no mistake, many of these people are single parents, who are already struggling to make ends meet and are the target of this Government.
Evidence has now emerged that Concentrix, on behalf of this Government, sent out, over a two-year period, almost a million letters asking for information about people’s circumstances, in what can only be described as a fishing expedition to detect potentially irregular tax returns. It is up to the constituent to prove that they are innocent before tax credits are reinstated. In other words, they are treated as guilty until proven innocent. It does not end there. Reports suggest that staff at Concentrix are regularly dealing with suicidal callers who threaten to kill themselves. How desperate does the situation have to get before urgent action is taken and the contract is ended?
The social and health impacts of the Concentrix contract, on both members of the public and employees, are horrific. That has been reinforced in the recent report of the Work and Pensions Committee, which found evidence of humiliation of claimants and appalling customer service, and appeal success rates of between 73% and 95%, described as
“a terrible indictment of the original decision-making process”.
Unsurprisingly, this is not the first time that Government outsourcing has failed to meet expectations. I made the point earlier that these payment-by-results contracts go back to 2003, when Labour introduced them for NHS England. I am sure everyone in this Chamber remembers Atos, whose shambolic and cruel tests were designed to strip away benefits from sick and disabled people.
Under the contract that this Government have with Concentrix, Concentrix is paid on a payment-by-results basis—in short, commission. The more tax credit payments Concentrix puts a stop to, the more money it pockets. Our constituents, who are very often in low-paid, part-time work, find themselves at the rough end of a contract that many of us would never sign up to in jobs in our everyday lives. How different the decisions made by this Government would be if Government Members were put on payment-by-results contracts.
It is hard to believe that this Government continue to cut HMRC jobs in Dundee and right across Scotland, while at the same time privatising and outsourcing contracts. HMRC departments, which are already understaffed, have been left to pick up the pieces and have spent months restoring backlogs of claims and errors. It is time to end this madness.
Although Concentrix certainly has questions to answer, I believe that the disastrous implementation of the Concentrix contract by the Tory Government has implications that go far beyond that specific company. This Government have created a system designed to place the burden of their failing austerity agenda firmly on the shoulders of those most disadvantaged in our society. The contract with Concentrix has not been renewed, which is a step in the right direction, and it looks as though it will shortly be brought to a close, which is good news. However, the Government need to go further.
Alongside the ongoing investigation of the Concentrix contract by the Work and Pensions Committee, an inquiry has been initiated by the National Audit Office. I welcome these developments, albeit at a time when too many of my constituents have already suffered. I urge the Government to set up a public inquiry to examine the conditions under which Government Departments award public contracts to private sector providers. Such an inquiry would offer reassurance to members of the public who are weary of hearing disaster stories from the NHS, HMRC and the Department for Work and Pensions. Among the aspects that I believe deserve particular attention are how to devise contracts that ensure value for money and efficiency without allowing companies to profit by manipulating results and ignoring the well-being of people in our society; a clear statement of ethical principles to emphasise justice for individual citizens and parliamentary accountability; and representation of consumer and service user groups in decision making at all stages of formulating, awarding and monitoring contracts.
In the end, everyone in this House must remember that we are privileged to be here and serve the public. In that spirit, I urge this Government to re-examine all their contracts with private companies and ensure that dignity and respect, rather than profit and price, are at the heart of procurement.
I want to set out the experience of some of my constituents with Concentrix and their tax credits. Having listened to colleagues around the House and from around the UK, I know that it is a familiar story.
Normally, my constituents have waited five to seven weeks before they come along and see me to try to get a problem sorted. We can then get it sorted, although I do still have eight Concentrix cases that have not been resolved. The Minister said that she was resolving them all very quickly, but that is not the case. It is four or five weeks since we took up many of these cases and they have not yet been resolved, so there are outstanding cases.
We saw a rapid increase in cases from August onwards. Before that we had a drip, drip, drip of cases that went wrong, but from August something happened—something at HMRC or something at Concentrix. It would be interesting to know what it was and who initiated it, because suddenly there was an influx of cases, all wrongly decided and all coming in in a rush. The contract has been running since 2014, so what happened in August? We want to press the Minister to tell us what caused that sudden spike in cases.
All my constituents who have come to see me are single mums with children. They have mainly been accused of having an undisclosed partner. Some have been told that they did not have childcare costs that they had claimed. Occasionally they have been told that they do not have children, when they do. Most had simply had money stopped, without receiving any prior notification. They found out that there was a problem because there was no money in the bank. When they tried to get through on the telephone they could not do so, and then they received a letter that said, “You have an undisclosed partner”, but it did not say who that undisclosed partner was supposed to be.
The letter said, “Prove that you don’t have an undisclosed partner. Send us evidence to show that you don’t.” However, without knowing who the undisclosed partner is supposed to be, how can anyone do that? Worse, when my constituents have discovered who that undisclosed partner is meant to be, it turns out to be a previous tenant of their home whom they have never met and who left years ago, or a family member, who they never imagined would be construed as an undisclosed partner because they were related. What duff information is being used to make the lives of these people a misery? I have said it is duff once and I will say it again. If Concentrix turned down 80% of the cases sent to it because it decided that there was not an issue, what kind of information was it looking at for those 80%, given the kind it was looking at for the cases it decided to act on? It beggars belief.
In all these cases, my constituents were told to prove that they did not have a partner, but no name was given—in all the cases that have been resolved so far, the determination has been reversed and claims have been put back into payment—and that seems to me to be a complete reversal of any proper burden of proof. You prove that you do not have an undisclosed partner, Madam Deputy Speaker—not at this moment, Madam Deputy Speaker. That is what these people are being told, and it is not fair. They are already in financial difficulty, which is why they can get tax credits. They are usually living on the financial margins, working part time and in low-paid work. I have constituents who have had to take their children out of childcare and are in danger of losing their job because they have been told that they do not have children.
It is taking far too long to resolve these issues. The worry and stress is particularly difficult when dealing with an unreachable and harsh bureaucracy. That is what makes this experience particularly Kafkaesque. There are secondary impacts that go beyond getting these claims right, including severe debt problems, rent arrears and threats of eviction. There are bank charges, damaged credit histories and massive mobile phone bills. It is all very well saying that these cases have been put right, but what about those ongoing impacts? What can the Minister say about putting those right?
I think that there are cases where people ought to receive compensation. It is distressing enough to have this done without the ongoing financial problems that result from it. What about control of the data that HMRC is passing on, or that it will look at itself in future? Why are those data so poor? How is it possible that previous tenants, including those who may no longer be alive, can be suggested as undisclosed partners? What kind of quality control is there for those data, because obviously it is not working?
It is wrong for the Government to incentivise maladministration in their contracts. That, in effect, is what has happened here. I think that my constituents who have suffered in these cases have been subjected to maladministration. If they are not properly compensated, I will suggest that they make a claim to the parliamentary ombudsman because of this maladministration. The Government could stop that happening by compensating them before they have to make any such claims.
The worst of it—I agree with my hon. Friend the Member for Stretford and Urmston (Kate Green) on this—is that this has been specifically targeted at a population largely made up of financially vulnerable single mums who are trying to do the right thing by going to work. They are excessively impacted upon by this kind of behaviour by bureaucracies that they cannot even begin to reach. I think that it is incumbent on the Government now to compensate and apologise to those people and ensure that the information they use in future is not so poor.
We are extremely hopeful that this sorry state of affairs marks the beginning of the end of payment by results in our welfare system. It has no place there, it creates perverse outcomes, and it has ruined the lives of thousands of people. Our social security system should be there to support people in their time of need, not to allow unaccountable conglomerates to make easy money chasing the voiceless and the vulnerable. Now is the time to draw a line under the grotesque profit model in our welfare system, because that model has failed: it has failed the individuals it was set up to help; it has failed employees; and it has failed the taxpayer.
All of us have horrific stories of individuals who have fallen foul of Concentrix. In my constituent’s case, her tax credits were cancelled while she was in a coma. Rather than answering for these failures, which lie squarely at the Government’s door, Ministers have preferred to throw this hapless contractor under the bus. However, as one senior Concentrix employee wrote to me:
“Every single action we took was directly informed by HMRC and was compliant in full with their guidance… there will be no investigation because there are paper trails after paper trails showing that we have only ever followed client instructions on amending claims.”
I was pleased to hear today that that is no longer the case and that there will be an investigation, because from start to finish this has been a mess entirely of the Government’s own making, and one for which they have not yet answered.
The company that conducted the trial that preceded Concentrix, Transactis, incorrectly removed entire awards regardless of evidence provided to the contrary. Despite the alarm bells that should have been ringing loud and clear in their ears, Ministers decided to push on. It was the beginning of a pattern that is now all too familiar.
Ministers have still not answered for structuring a contract that put maximising revenue at its heart in attempting to assess error and fraud—not accuracy, not meeting quality service standards, and certainly not customer service, but making as much money as possible off the backs of the vulnerable. Ministers have not answered for the measures they included in the contract to maximise revenue. HMRC “profiled”—that is the Government’s own word—1.4 million vulnerable individuals and then unleashed Concentrix to carry out its dirty work.
We do not know—they will not tell me, despite repeated requests—what indicators the Government used to establish which groups to target. Given what we have heard today, it is clear who was in that demographic: single mothers with children. It is some measure of justice that it was women like that—thousands of them across the country—who brought this contract crashing down with their articulate, brilliant campaign.
That is not the only issue with the contract, because the process also turned the burden of proof on its head. HMRC was asking tax credit claimants to prove that their claim had not been made in error. They were asking people to prove a negative, as my hon. Friend the Member for Garston and Halewood (Maria Eagle) explained so eloquently. The Tax Credits Act 2002 clearly states that HMRC can amend or terminate tax credit awards only if it has significant grounds for believing that they are erroneous. It does not allow them to shift the burden of proof on to the claimant to disprove that a tax credit award has been made erroneously. That led one young mother to say to me, in tears, that she felt that she was being “treated like a criminal” and that Concentrix was treating her as “guilty until proven innocent.” One mistake like that would have been unacceptable, but 11,000 people had to apply for mandatory reconsideration in the past year alone. That cannot simply be passed off as a mistake; it was the deliberate design of the contract itself.
HMRC employed a contractor with just 500 staff to target over 2 million people. That meant the company’s pressured, poorly trained and low-paid staff were being instructed to open dozens of highly sensitive cases every day, leaving the phone lines permanently engaged, as we have heard. Concentrix staff have told me that the call volumes were such that the company would have needed to triple its staff in order to answer the phones.
Astonishingly, despite the failure of the trial, despite the highly sensitive nature of the contract, and despite the sheer volume of individuals a completely untested private sector provider had been designated to pursue, we now know that the Government did not actually monitor the performance for the first year of the contract. HMRC had no idea how many performance failures the contractor was incurring. Once it started monitoring that, it soon found out: over 120 breaches in the space of just nine months; and 13 black performance failures. Ironically, HMRC is up for an award this year for analysis and use of evidence. I very much hope that this is not viewed as best practice across Whitehall.
Does my hon. Friend share my concern that the chaos she is outlining will end up costing the taxpayer a whole lot more than any money that was saved in the first place?
That is a major concern, not least because HMRC has now had to allocate hundreds more staff to deal with the backlog that Concentrix caused, because this was failure on a monumental scale from start to finish. It seems that Ministers did not pay the blindest bit of notice until the scandal reached the media, because we now know that HMRC was about to renew the contract before the scandal hit.
The Government have traded on welfare as a dirty word, and now they are seeing the despicable consequences of their political attacks: single parents and families who have done nothing wrong being ruthlessly pursued by an unaccountable US firm for profit. Could this contract have been drawn up had the Government not fuelled a contemptible narrative about those on low pay and those who rely on tax credits to get by?
We welcome the fact that the National Audit Office will be investigating the drawing-up of this contract. Can we be assured that that will include the management of the contract and the profiling assumptions underpinning it? Will the NAO release any impact assessment that must have accompanied the contract? Will the Minister assure us that any compensation awarded will not be counted towards tax credit awards?
Does the hon. Lady agree that the National Audit Office is independent and works for this Parliament, not for the Government? Therefore, the NAO would structure how it conducted its inquiry, not necessarily a Minister. That is the core of what we want: somebody independent who will get to the nub of this and present evidence to this Parliament, not necessarily the Government.
I completely agree, and it is vital that this is an independent review, because, as we have heard on both sides of the debate, these problems originate from the Government themselves. However, we need to know that this information will be published, and if the NAO does not do that, we would call on the Minister to publish it alongside this inquiry.
Above all else, if the Government’s rhetoric is worth a penny, they will surely pledge to call time on contracts such as this, which target innocent single parents and families, and encourage the private sector to profit from them. That has no place in our welfare system.
Like many Members on both sides of the House, I have been inundated by constituents since the official Opposition—particularly my hon. Friend the Member for Sheffield, Heeley (Louise Haigh)—exposed the disgrace of what Concentrix has been doing.
One concern for me is that this seems to be a deliberate attack specifically on women—often innocent single mothers—and that is completely unacceptable. One case that was brought to my attention in my constituency involved a single mother living in a property with four flats. She was told on three separate occasions that she was living with each of the other tenants. She was then told that she was living with another tenant in the next block. Unsurprisingly, my constituent found it rather difficult to prove that she was not living with these people, particularly when she did not know the other people living in the other flats. That is not uncommon when someone is living in supported housing and focusing on bringing up their children, which is what we would think would be the whole point of a tax credit, allowing these women to work.
The key thing to remember is that none of us who have been helping constituents impacted by this travesty has any idea how many others in our communities have been affected but have not reached out to us, as Members of Parliament. It is important to recognise that, in contrast to how the Government may view people in receipt of tax credits, the vast majority are hard working and proud, with many affected by Concentrix having suffered in silence.
Ultimately, there are two forces to blame for the scandal: Concentrix and the Government. The actions of Concentrix can be labelled only as atrocious, yet, last month, when it learned that it would no longer have the contract renewed, its response was that it came “as a significant shock”. We can only conclude, therefore, that it saw little wrong with what it was doing.
The Government are, however, ultimately to blame. We should, of course, hold Concentrix to account for what it has done, but we should recognise that the true fault lies with the Government. Concentrix acted in a way that, because of the Government contract, was based on a payment-by-results model. The Government agreed to a deal with Concentrix under which they would pay more and more depending on how many people’s tax credits were removed, so it is no wonder that Concentrix acted so inappropriately.
If the issue surrounding Concentrix was isolated, the Government might have been able to claim that this was an honest mistake. The reality is, though, that the horror stories we are hearing today are indicative of this Government. Along with the bedroom tax, ruthless benefit sanctions and a handful of other policies, the hiring of Concentrix is yet another action by this Government that has led to record numbers of people being reliant on food banks. In Pencoed, in my constituency, a food bank will be opened at the end of this month. Ultimately, the blame for there being such demand lies with the Government.
The Government have shown yet again that they treat people in receipt of social security as a resource they can harvest money from, with no concern for the consequences of their actions. They have shown that they are happy to see more and more people reliant on food banks if that will save them just a few thousand pounds.
Although we may have a new Prime Minister, the attitude towards people in receipt of social security remains the same. As yet another food bank opens in my constituency, and yet another scandal passes, I hope the Government will learn from their mistakes, as I hoped they would learn from their previous errors time and time again. I am afraid to say, though, that I do not hold out much hope.
This has, indeed, been a very passionate debate. I would like to take this opportunity—I am sure I speak for all Members on both sides of the House—to thank our staff members in our constituency offices who have had to deal with people who have been at the very end of their tether. Many have had no training and have met people in the most dire circumstances. I would like to place on record our thanks to all the staff of all Members on both sides of the House.
As we know, tax credits are a vital financial lifeline for many families who are struggling to get by on low wages. They allow single mothers and fathers the dignity of work, by ensuring that their income is enough to pay for rent and food and for heat for their homes. Without these payments, families have been plunged into immediate poverty, with all the financial and emotional stress that comes with coping with such a situation.
Despite many parliamentary questions and two debates, we are still no closer to finding out the facts or achieving a proper settlement to this sorry situation. At the same time, families know that their situation was entirely caused by the mistakes of others and as a direct result of faulty administrative processes and procedures, all of which must be fixed. Compensation must be paid.
I would like to refer to a particular case study. A constituent in Alloa was referred to my office just yesterday by the citizens advice bureau. Seven weeks ago, she had her money stopped without warning. She was accused of living with three different partners at the same address at the same time. Advised by Concentrix that she had been sent a letter in May—a letter she said she did not receive—she was then told the evidence she was required to submit. She submitted what she could: two bank statements and a council tax statement. She was told that that was not enough. She could not afford, however, to provide the bank statements requested, as they cost £5 per statement.
The realistic timeline for Concentrix cases needs to be known. Despite the assurances I was given by the Financial Secretary on 14 September, it is still taking around eight weeks from the submission of evidence by those falsely accused by Concentrix for payments to be reinstated. That is two months without vital payments—payments that are stopped without warning and with no good cause.
On the phone yesterday, HMRC advised my office that the burden of proof remains on the individuals accused of claiming tax credits incorrectly, not on the accuser. That is contrary to the laws of natural justice and contrary to the view of the upper tribunal, which has already considered similar issues.
For the Minister’s benefit, I would like to set out a timeline for an individual who is accused. On day one, their money is stopped. They call Concentrix to find out what has happened, and they are advised of what action is needed. It can take days to get an answer. On day two, they start to collate the evidence required. HMRC stated to my staff yesterday that it required the following evidence to establish innocence after making these accusations: bank statements for a period often up to a year; mortgage proof or a rental agreement; a court or solicitor’s letter providing detail of legal separation documents; Child Maintenance Service documents; evidence from the Department for Work and Pensions or Jobcentre Plus to show the benefits claimed, if applicable; car insurance documents; home insurance documents; detailed explanation of the person’s relationship status with the person they are accused of being in a relationship with—in this case, it is three people, two of whom my constituent does not even know; and a letter from the landlord to confirm who lives at the property.
That takes us to day six, when the person sends that evidence to HMRC, if they can afford to bring it together. On day seven, the evidence arrives at the HMRC and Concentrix offices. On day 28, HMRC begins to look at the case. People in previous cases have told us that it would take two to three weeks before the evidence could be looked at, due to a backlog in processing cases. On day 56, the evidence is processed by HMRC. Once the evidence pack is opened by HMRC staff, it takes 15 to 20 days to process. On day 60, there is a positive result—if the person gets a result—as money will be paid to them within four days. That is eight weeks’ processing between the submission of documents and payments being reinstated.
In the intervening period, many of the individuals affected have experienced grave mental health issues. I am aware of at least two cases where people have gone on to self-harm as a result of the stress endured. Does my hon. Friend agree that the targeting of the most vulnerable is not something that should be happening under Government contracts?
My hon. Friend makes a very good point. She has huge experience in the area of mental health. I am sure it is a matter of great concern and disturbance to us all to hear that people are resorting to self-harm.
My constituent continues to wait, as HMRC refuses to act until it has received a year’s worth of bank statements that she cannot afford to provide. HMRC did not inform her of the hardship payment. Will the Minister advise us on the guidelines with which HMRC is working in relation to the hardship payment? Is it not offered in all circumstances? Are not all people in positions of hardship once they have had these payments stopped?
In order to support those affected, we must immediately take a number of actions to remove the financial barriers to justice for these victims, and I ask the Minister to consider committing to these today. HMRC should immediately provide a freephone line for victims to use. As things stand, if someone wants to ask a question or appeal a decision, it is up to them to phone the call centre, and that can cost 10p a minute. Some callers have had to wait for hours, as confirmed in many speeches. Over and above this, HMRC should now act to provide a free call-back service for tax credit inquiries. HMRC should also meet the full cost of sending people all documents with postage-paid envelopes so that they can send back the information that is required on the basis of incorrect decisions that have been made on their part. Those changes are achievable, deliverable and fair, and should be implemented without delay. That is the right thing to do in these circumstances.
When this exercise is complete and people have the opportunity to access justice, at no cost to themselves—neither should there be—we can then move our attention on to securing full, fair and proper compensation for all victims, some of whom have lost their jobs and homes as a result of this fiasco.
I am grateful for the opportunity to speak in this debate. Like other Members, my constituency casework is full of examples of the mismanagement of the tax credits contract. I thank my constituency team back up the road—Iain, Colin, Jenn and Louise—who have dealt with a large volume of cases, always with great sensitivity and professionalism.
Over a long period, Her Majesty’s Government have created a system that they charge Her Majesty’s Revenue and Customs to administer. HMRC outsources the process but not its responsibility, and this time its chosen enforcer was Concentrix. However, it is unfair to lay all the blame at the door of Concentrix staff, or, indeed, HMRC staff. The current welfare system, as designed, is flawed—seriously flawed—and while we continue to support it, the blame is ours. Far from enabling people and giving them the financial security to build their own lives, the welfare system has made life more complicated for those who need support.
Dealing with poverty is an ongoing struggle in constituencies such as mine, where deep-rooted inequality continues to stifle ambition and opportunity. Yet, as with so many other policies, my constituents are once again disproportionately affected by the UK Government’s inadequacies. We have heard excellent contributions from Members who outlined specific examples of how the tax credit contract has been so appallingly mismanaged. However, the saddest indictment of UK Government welfare and tax policy is that there are still so many people in desperate need of tax credits in the first place.
Concentrix is clearly not blameless in this situation; its faults and mistakes are well documented. However, while the UK Government may solve the problems inherent in this contract by bringing it back in-house, we are still left with the wider problem of Government services being delivered by private companies. Private companies should never be in the position of delivering vital public services. Citizens and Governments should have a direct relationship with each other. Taxpayers contribute directly to the Government, but when the money is going in the other direction, it should not be filtered through a private company before it gets to the individual.
I agree that these human issues are far too sensitive for private companies to be profiting from them. Interestingly, when I first raised this in January with the Leader of the House in asking for a debate or a statement, I was told, “Just send me information about the problem with a case.” Why did it take eight or nine months and the involvement of the BBC to finally get a Minister to the Dispatch Box to do something about this?
The hon. Gentleman makes his point very eloquently.
Companies bid for UK Government contracts not on the basis of how they can deliver a fairer and more equal society, but of how they can save money for the Government. Companies are incentivised to deliver these results, and ultimately their first loyalty is to owners and shareholders. By off-loading services to private companies, the UK Government and HMRC are trying to absolve themselves of responsibility when there is a problem. We have seen these problems appear time and time again. G4S, Atos and Concentrix are not names that inspire public confidence in the delivery of high-quality public services. How many more disasters is it going to take before the UK Government realise that corporations should not be delivering public services? My constituents have no interest in Government reviews, PR exercises or ministerial statements about the issue—all they want is to be paid what they are due, on time, without the risk of its being arbitrarily removed.
The existing welfare system needs to be ripped down and replaced with something suitable for the 21st century. A couple of weeks ago, we had a debate in Westminster Hall about a universal basic income. There is support across parties for a serious investigation into this. We should stop treating the symptom and start treating the entire patient. Maybe, just maybe, the time for a universal basic income has come.
I am glad to follow the hon. Member for Inverclyde (Ronnie Cowan).
We have heard many interventions and speeches. The hon. Member for Paisley and Renfrewshire South (Mhairi Black) talked about a fishing expedition on the part of Concentrix. She enlightened us about the real Casanova of Scotland, R. S. McColl—I thank her for that—but more importantly, the cataclysmic effect of this flawed process. The hon. Member for Torbay (Kevin Foster), in a thoughtful contribution, gave us the experiences of his constituents and welcomed the Government’s actions in relation to the renewal of the contract.
My hon. Friend the Member for Stretford and Urmston (Kate Green) focused on the policy design that has led to single women, in particular, being affected or targeted, talking about the effects on their children and setting out a series of questions that went to the heart of the matter. The hon. Member for Gloucester (Richard Graham) discussed the relative value and efficiency of the contractor’s services, the role of HMRC, and the role of incentives in contracts of this nature. The hon. Member for Ayr, Carrick and Cumnock (Corri Wilson) talked about a conflict of interest and the bad practice of Concentrix. My hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) spoke of a series of constituents, usually single mothers, who have been distressed by the process, citing a catalogue of errors, and the need to fast-track these people’s benefits. My hon. Friend the Member for Merthyr Tydfil and Rhymney (Gerald Jones) talked about the hardship caused to his constituents and the common factors in the contractor’s lack of understanding and of compromise.
The hon. Member for Foyle (Mark Durkan) welcomed the personal intervention of the Financial Secretary, but questioned HMRC’s role in the process and spoke of the need for a change in its culture. The hon. Member for Dundee West (Chris Law) gave a number of examples of how people are being pushed into poverty. My hon. Friend the Member for Garston and Halewood (Maria Eagle) mentioned the influx of cases in August and asked what had caused that spike. She also talked about phantom tenants, the unreachable, and the harsh and inaccessible bureaucracy.
My hon. Friend the Member for Sheffield, Heeley (Louise Haigh) said that we want a system that supports people, not conglomerates, and a Government who will ensure that people, not corporates, are at the top of the agenda. My hon. Friend the Member for Ogmore (Chris Elmore) talked about the effect on single mothers, but also asked the key question of how many others have been affected, have not been able to reach out to their MPs and have suffered in silence.
The hon. Member for Ochil and South Perthshire (Ms Ahmed-Sheikh) suggested providing support for free communication with HMRC, and the hon. Member for Inverclyde said that the responsibility lies with the Government and that the citizen’s relationship should be with the state, not individual contractors.
I welcome the Minister’s mea culpa, but it does not go far enough. In last week’s Westminster Hall debate, I said that I, like other hon. Members, had been contacted by distressed constituents who had had their child tax credits stopped, with scant attention paid to due process. In effect, the plenipotentiary powers given by the Government to Concentrix to act as it saw fit to punish and penalise tax credit claimants were used with an alacrity bordering on the enthusiastic and manic. It has come to something when it is difficult to put a cigarette paper between the question of who, out of the Government and Concentrix, has been the bigger of the two culprits, but, following the principle of, “Whoever pays the piper calls the tune,” I opt for the Government.
As I said in last week’s debate, it does not take a genius to work out that, if a company is paid on the basis of bonus or commission to find tax credit error and fraud, it will start with the easy targets. In pursuit of a business model approved by the Government, Concentrix pursued people, mainly working women, to provide information. It was nothing short of overbearing state intrusion into private lives, but it was done under the guise of reclaiming taxpayers’ money from fraudsters and cheats, which is how many people felt that they were treated.
The plain fact, however, is that there was no evidence. In many cases, the victims of that intrusion were left penniless and had little capacity to fight back, as many Members have said. Meanwhile, the Savings (Government Contributions) Bill, which is currently in Committee, encourages people to save money. One agent of the Government administers the giving away of taxpayers’ money while another takes money away, by diktat, from working women. What a topsy-turvy state of affairs.
The whole process was deeply flawed and, as has been said, operated on the presumption that people were guilty until proven innocent. Apparently, a claimant would be sent a letter by Concentrix indicating that they were not meeting the standards for a child tax credit claim, and requiring them to provide evidence of their occupancy arrangement. Some attempted to call Concentrix, only to find that the number was engaged, but if the company did not hear from the claimant, their tax credits were stopped summarily.
I do not know whether Ministers were consulted on, or asked to sign off, that process. I asked that question last week, but did not receive an answer, so I ask them to enlighten us. Even Atos did not have the power to withdraw benefits. Concentrix was given carte blanche to do so, in a licensed way, by the Government, who were in the throes of renewing the contract for a job well done, which is remarkable. Did Ministers ask why Concentrix had so many savings on its books, and did they listen to the complaints of many of our constituents at an earlier stage?
Last week, the Economic Secretary claimed, very creatively, that it was the Government who stepped in to get things back on track when they realised that the service being provided by Concentrix was not good enough. That rewriting of history would be risible if the matter was not so serious for thousands of mothers all over the country. In reality, it was the Opposition who originally asked the National Audit Office to investigate, and we pushed for oversight and demanded action for the thousands of families who have still not received payments from Concentrix. The Government took action only under duress and pressure from the Opposition and the national media.
Does the shadow Minister agree that, given earlier comments, it is important that the National Audit Office leads the investigation into what happened, because it is independent and answers, ultimately, to this House, not to the Government?
That is a statement of the situation as it is. The key thing is that we need an independent investigation to get to the bottom of this.
The Government have said that the contract will not be renewed beyond the end of May 2017, but that still leaves us seven months. I am pleased that staff have been brought into HMRC, and I would like to know what measures the Government are putting in place to ensure that there is total oversight of Concentrix throughout the period and to make sure that nothing else goes wrong. When all is said and done, this is a question of the performance management of a government contractor, and a clear lack of oversight by the Government.
I deduced from the Economic Secretary’s inadequate response to the Westminster Hall debate last week that HMRC handed over third-party data to Concentrix and left the company to it. There was no oversight and, in the Minister’s own words:
“Concentrix…then chose who to pursue from those data.”—[Official Report, 18 October 2016; Vol. 615, c. 261WH.]
The Government have given Concentrix a free hand to intimidate and falsely accuse hard-working mothers of fraud. The Opposition want to know who signed off that decision and why there was no accountability. The Government have announced a £100 hardship payment for those affected, but no amount of money can make up for the struggles that those women faced after their tax credits were wrongly stopped, and we need an apology. As many other Members have done, I ask the Government to give that apology.
Concentrix will have the contract for a few more months, but it does not seem to have suffered any sort of penalty for its actions. We would like to know what is happening in that regard. Can we have a precise figure for how many decisions Concentrix got wrong? In how many instances was payment reduced because Concentrix failed to meet its performance standards? Perhaps the Government’s refusal to answer such questions and release the relevant information is because even with deductions for poor performance, Concentrix has still made huge profits on the backs of desperate and vulnerable people. We need answers to these questions. Perhaps an independent investigation—maybe by the NAO—will give us those answers, but whoever gives them to us, we need them as soon as possible.
This has been a thoughtful debate. I thank all hon. Members for their contributions and efforts to support their constituents. It is right and appropriate that I thank MPs’ staff, who have worked hard to help constituents with their tax credit claims.
It is clear—there is no doubt—that mistakes were made in HMRC’s partnership with Concentrix. As my hon. Friend the Financial Secretary to the Treasury said, it is right that we take action to stop errors and fraud in the tax credit system. That was why HMRC entered into a contract with Concentrix to support that action, which—let us be clear about this—delivered millions of pounds of savings and achieved close to the lowest level of fraud and error in the tax credit system since it began.
I reiterate that this is all about people. It is about making sure that the most vulnerable people are paid appropriately and that errors are not made. It is often very difficult for the most vulnerable people to deal with overpayments.
Given the poor quality of some of the information that Concentrix has used—information about tenants, previous tenants, people who are dead and people who live in the same block but not in the same house—how can the Minister justify putting our constituents through the pain of having their payments stopped on such very poor information?
I will cover that matter later, but there are clearly lessons for all of us to learn.
Given the number of people affected, what work will the Government—the Treasury, working with HMRC—carry out to help local advice centres that, like Members of Parliament, may be approached by people for advice about what to do if they receive such letters?
I will certainly ask HMRC to look into that. The important point is that this is about helping people. It is easy to stand in the Chamber citing figures and trying to pretend that something is not what it is. This is about making sure that the most vulnerable people get the money that they deserve, and about clearing the backlog as quickly as possible.
This issue is about customer service. Everyone has a right to expect a good level of customer service. There is no doubt that the customer service provided in recent times was simply not good enough and not up to the standard clearly specified in the contract. As a result of that poor performance, a great deal of worry and distress has been caused to the often vulnerable people who claim this benefit. We heard lots of very good examples of that today. I do not think that any MP is in any doubt that vulnerable people have suffered worry and distress. I advise anyone who has been adversely affected to get in touch with HMRC, which will take all complaints seriously and provide compensation where appropriate.
I move on to specific issues that hon. Members raised. The hon. Member for Paisley and Renfrewshire South (Mhairi Black) suggested that Concentrix targeted people at random and engaged in fishing expeditions, which the hon. Member for Bootle (Peter Dowd) also mentioned. That was not the case—Concentrix was not allowed to engage in fishing expeditions. It is important to note that when information was incomplete or suggested that something was wrong, customers were asked to provide further information to enable an informed decision to be reached.
Would this be an opportunity for the Minister to tell the House why the information used was so very poor?
Some of the information used was very poor—some of it applied to people who no longer lived at the address—but, at the end of the day, the review will provide lessons for us all to learn.
The hon. Member for Paisley and Renfrewshire South said that the evidence was flimsy. HMRC sent Concentrix cases to review if it thought that they were worth checking because there was an indication that the tax credits claim might be incorrect. Concentrix and HMRC will never be able to screen out all cases that do not involve error or fraud through data analytics alone. That is why—this point is important—HMRC and Concentrix write to customers to ask for more evidence to inform decisions.
The hon. Lady asked for an apology. At a sitting of the Work and Pensions Committee on 13 October, the chief executive of HMRC apologised for the worry and distress caused to claimants. On behalf of the Government, I echo that apology today.
The hon. Member for Stretford and Urmston (Kate Green) said that she thought that the letters were unconvincing and misleading. This is an area in which there are lessons to be learned. It was said that customers could not provide the evidence requested. Most people were able to provide the information asked for, but we want to make it easier and cheaper to supply information in the future, so we are looking at ways of improving the customer journey on tax credits.
Will the Minister give way?
I will keep going, if I may.
The hon. Member for Stretford and Urmston also asked whether the contract unfairly discriminated against women. It is important to note that as of April 2016, 88% of single claims were made by women, and 80% of single claims sent to Concentrix to check with regard to high-risk renewal were from women. I recognise this—
Will the Minister give way?
I will not—I have to respond to a lot of people.
I recognise that sensitivity is needed on tax credit claims and that claimants should be treated with dignity and respect. The hon. Lady also asked about penalties. The figures that will and have been deducted from payments, and the detailed calculations, cannot be disclosed at this point as they are commercially sensitive, but the amounts will be fair and appropriate.
The hon. Member for Salford and Eccles (Rebecca Long Bailey) said that Concentrix was getting a rap on the knuckles. I point out that it is actually losing the contract.
My hon. Friends the Members for Torbay (Kevin Foster) and for Gloucester (Richard Graham) made particularly thoughtful and considered contributions. They have obviously given the matter great thought.
The hon. Member for Ayr, Carrick and Cumnock (Corri Wilson) asked whether the contract was ended only because of poor call handling. That was not the case. The poor call handling had an impact on customers and resulted directly in tax credits being stopped. She also mentioned the downsizing of HMRC. An extra £800 million has been announced for HMRC. Using a private company in this way offered a cost-effective method of reaching a large number of people.
The hon. Member for Cardiff South and Penarth (Stephen Doughty) asked whether this situation spelled the end for outsourcing. This is about cutting down on errors and some fraud, but HMRC will evaluate each case on its merits to deliver value for money for the taxpayer. It is fair to say that the lessons learned from this situation will help to inform future contracts.
That is the central point. As my hon. Friend the Member for Garston and Halewood (Maria Eagle) said, the information was duff, and was acted on incorrectly, because the contract was designed to incentivise Concentrix through profit to incorrectly target people and strip them of their tax credits. Will the Minister commit to reviewing payment by results across our welfare system?
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.
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?
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.
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.