Concentrix backlog on tax credits hit 180,000 cases, says audit office
Call centre giant Concentrix was dealing with a backlog of more than 180,000 tax credit claims at the height of a botched outsourcing plan, it's emerged.
The firm, which employs more than 1,800 staff in Belfast, was given the HMRC contract to reduce fraud and error in the tax credits system.
The majority of that work was carried out at its Belfast office. Around 500 staff in the city had been working on the project.
Now, a report from the National Audit Office (NAO) highlights the failings of the scheme.
Compensation payments totalling almost £87,000 were paid out to tax credit claimants who suffered as the result of the outsourcing.
At times, the company was unable to deal with the level of calls coming through, which at one stage were at a volume six times higher than was predicted. And by September, Concentrix had a backlog of more than 180,000 open cases, the report has said.
Concentrix's performance in August 2016 was also affected by IT failures, it said.
It was brought in to help HMRC reduce fraud and error in the tax credit system, in some cases by stopping the benefit being paid to some claimants entirely.
The NAO found that during the life of the contract, between November 2014 and its early termination in November 2016, there were 108,000 cases where claimants' tax credits were adjusted or terminated.
But almost a third of those decisions were subsequently overturned following a mandatory reconsideration.
The report revealed that by mid-December 2016, HMRC had paid a total of £86,815 in compensation payments to claimants handled by Concentrix, including almost £68,000 for the worry and distress caused.
The planned three-year deal had been estimated to save £1bn by reducing fraud and error but only delivered an estimated £193m of that sum.
"By September 20 when the high-risk renewals process was scheduled to complete, there was a backlog of 181,000 open cases," the report says.
It adds: "...after some improvement, the performance of Concentrix fell again during the 2016 renewals process. Concentrix's failure to process compliance cases in accordance with its plan meant resourcing in call centres was not sufficient to meet the resulting increase in customer calls."
HMRC also confirmed it would "not replace Concentrix with another third-party provider".
It expected to pay Concentrix between £55m and £75m over the three-year life of the contract.
The company also told the NAO that "it made a loss of £20.5m on the contract".
The NAO investigation says that between November 2014 and September 2015, Concentrix "consistently failed to achieve over half of its performance targets" and met just 104 of a total 242 applicable monthly performance indicators.
It said "its performance was worst during the peak renewals period in mid-2015 when in July it answered an average of 4.8% of calls within five minutes" failing to hit a target of 90%.
Despite the problems, Concentrix was able to renegotiate its deal in October 2015 - increasing its commission from 3.9% to 11%.
"Concentrix was set to earn less commission than it predicted as the savings identified by its work were lower than expected, and it questioned the value of continuing the contract," the NAO report said.
Problems continued and the firm was "unable to cope" with the volume of calls it received in August 2016, exacerbated by IT failures.
In September 2016 HMRC stepped in, stopping new cases being passed to Concentrix and allocating the equivalent of 670 staff to help clear a backlog of 181,000 cases.
The NAO report said: "In August 2016, MPs and the public raised concerns that Concentrix had incorrectly suspended or terminated a number of claimants' tax credits awards.
In November 2016, HMRC and Concentrix agreed to end the contract and a number of Concentrix staff transferred to HMRC.