Report findings and recommendations
The Committee report concludes that:
- "Cut first, think later" attitude plunged claimants into humiliating hardship and debt
- "Guilty until proven innocent" approach saw 90% of initial appeals upheld, with high human cost of errors, yet HMRC pressured Concentrix to find even more cuts
- HMRC should review all summer 2016 Concentrix decisions not already appealed
- Government should commission independent "root and branch" review of tax credit decisions before any further Concentrix-style compliance drives
- HMRC was negotiating a new contract with Concentrix as late as 8 September
Concentrix were contracted by HMRC in May 2014 to provide additional capacity and expertise to check for possible fraud and error in tax credit claims. This was the first time a private company had been delegated such a degree of decision making responsibility for UK benefit claims. In September 2016 HMRC announced they would not be renewing the contract and took much of the work in house. HMRC have since processed the majority of appeals against Concentrix decisions. In November 2016 they announced the existing contract had been terminated.
Flawed decision making process
The Committee says a flawed decision making process left vulnerable people in humiliating hardship while Concentrix and HMRC targeted "strike rates" of benefits being removed. 90% of those decisions were overturned on initial appeal, yet in many cases people lost benefits for months, being forced to borrow money and use food banks to survive.
The Committee says collapse of the Concentrix contract was much more than a gross failure of customer service. The whole system was stacked against claimants who were guilty until they could somehow prove themselves innocent. The same process continues to be used by HMRC.
- the merest hint of financial association between a claimant and another adult in the household could be enough to trigger a Concentrix compliance check;
- similarly, claimants were targeted on the basis that they merely shared some characteristics with unrelated fraud or error cases;
- such claimants were sent letters informing them their tax credits would be stopped unless they could prove within 30 days that they were entitled to them;
- claimants seeking to prove their eligibility were not informed of the full basis of the suspicions against them, such as the identity of a possible undeclared partner; and
- such claimants were tasked with proving the negative that they were not in a relationship with someone with some form of connection to them
Poor customer service and monitoring system
In far too many cases tax credits were stopped for no good reason and through no fault of the claimant. People faced having their benefits stopped if they did not respond to a letter from Concentrix, but it is clear that many letters, which were sent by a sub-contractor, were not received by claimants. The first some affected people knew that their benefits had been stopped was when they checked their bank accounts.
- The Concentrix phone banks completely collapsed in August 2016, resulting in great expense in both time and money to claimants who could invariably afford neither. Less than 1% of calls were answered within the target 5 minutes on several days in mid-August. This was unacceptably poor customer service
- Claimants feared they were being scammed when they received letters from an unknown company demanding their bank statements and other personal information. HMRC resisted Concentrix requests to have their logo removed
- The systems used to process evidence provided by claimants in response were "at best slow and at worst unreliable": Concentrix were unable to operate to the same levels of speed and accuracy demanded of claimants
- HMRC's monitoring systems failed as they took more than three weeks to escalate severe problems to senior staff. This is a particular concern as HMRC were well aware of the risks
The Committee heard of people being plunged into debt while without the in-work benefit, staggered refunds after appeals were upheld or losing other benefits when their eventual repayment took them over benefit income thresholds. HMRC should review all of these repayments and Government should ensure people receive the full amount they were entitled to, had it not been for their tax credits being withdrawn in the first place.
HMRC put pressure on failing contractor
The Committee says HMRC were not only complicit in the decision making process used by Concentrix: they pressured their failing contractor to subject yet more claimants to it. The system of outsourcing should be overhauled: it is imperative that private contractors can be held accountable for their performance. This should extend to the identity, responsibilities and performance of subcontractors. The Government should commission an independent root and branch review of tax credit compliance processes incorporating decision making and appeals, before any further HRR cycles are undertaken.
- Published with the report are a series of transcripts of conversations between claimants and Concentrix staff, demonstrating the position that claimants were put in, often after lengthy, expensive waits on hold and after several days of trying to get through
- The Committee has also published 400 pages of documentation provided by Concentrix, including emails and board papers. Extracts from these papers are appended to the report
Rt Hon Frank Field MP, Chair of the Work and Pensions Committee, said:
"The Committee was horrified to learn of the 'cut first, think later' approach that was deployed by Concentrix. Our horror was compounded by the company’s—and HMRC’s—apparent celebration of its 'strike rate' in cutting families’ tax credits. The damage caused to families’ living standards by this 'strike rate' is still being felt by my constituents needing to rely on food banks while their claims are reinstated. Although the Committee welcomes HMRC’s decision to bring in house its tax credit compliance functions, we are clear that this will not automatically deliver a better service. Nor are those families driven into debt going to be rescued from the plight into which this sorry episode plunged them.
Despite their protestations to the contrary and contrite performance before our Committee, HMRC was negotiating renewal of Concentrix's contract until just four days before they announced otherwise and when they were well aware of the failings. They only pulled the plug under public, parliamentary and media pressure."