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No inquiry after tax credits firm Concentrix fails to have contract renewed

Published 14/09/2016

The announcement follows complaints the firm wrongly cut payments to hundreds of claimants.
The announcement follows complaints the firm wrongly cut payments to hundreds of claimants.

The Government has said it did not renew the contract of an American firm accused of wrongly withdrawing tax credits from claimants because its work was not up to scratch - but has ruled out an inquiry.

Concentrix's contract to reduce fraud and error in the tax credits system will not be extended when it comes up for renewal in May 2017.

Responding to an urgent question on the matter in the House of Commons, Treasury minister Jane Ellison said the firm has "not been providing the high levels of customer service that the public expect and which are required in their contract".

But she said there is no need "to go into inquiries etc etc" as the contract is not being renewed.

A number of MPs have called on the Government to investigate following a sharp rise in complaints from claimants that they were wrongly having their benefits stopped.

Shadow Treasury minister Rebecca Long Bailey said: "Many honourable members across the House have been contacted, as she has, by distressed and anxious constituents, often hard-working individuals, who have had their tax credits cut unfairly - pushing them, in many cases, into extreme hardship.

"Now whilst we welcome that HMRC has finally taken action in announcing that the Concentrix contract will not be renewed, it is most regrettable that the Government has only done this when events have been dramatically exposed by the media."

She warned that with Concentrix continuing the contract for another eight months there is "a risk" that "service failures will continue".

Ms Long Bailey urged ministers to urgently revise the contract and consider bringing the service back in-house.

She added: "Will the Government now commit to an official investigation into Concentrix's conduct since it was awarded the contract in 2014 so that we can determine how this situation was allowed to arise?"

Among the cases highlighted was a teenage mother who complained her payments had been cut after she was wrongly said to have been married to a 74-year-old man who was dead.

Ms Ellison said the decision not to renew the contract was taken following a number of complaints.

She told the Chamber that it is right that fraud is investigated although it is "stressful" for someone to receive a letter telling them their tax credit has been axed.

The minister said: "Despite the best efforts of the staff manning the phones, with the high volume of calls in recent weeks Concentrix have not been providing the high levels of customer service that the public expect and which are required in their contract.

"HMRC has therefore given notice that this contract will not be renewed beyond its end date in 2017.

"HMRC is also no longer passing new cases to Concentrix, but is instead working with them as a matter of urgency to improve the service they provide to claimants and resolve outstanding cases."

She said 150 HMRC staff have been redeployed to address complaints and resolve cases.

But she dismissed Labour calls for an investigation into the matter.

Ms Ellison said: "I don't think there's any need to go into inquiries etc etc, we have a contract, it is monitored on a regular basis, it is not going to be renewed when it comes to an end in May next year.

"And the focus I think for all of us, and particularly for me and for HMRC, in the coming days and weeks, is in making sure we get outstanding cases resolved, particularly the most vulnerable, and that we make sure that people have the money to which they are correctly entitled."

Concentrix was originally awarded a three-year contract worth between £55 million and £75 million on a payment-by-results basis. The minister said it has identified nearly £300 million of incorrect payments.

MPs shared stories of constituents who have been plunged in to debt and their children refused free school dinners after having their tax credits wrongly stopped.

Former Tory minister Sir Desmond Swayne said: "I've got cases of women who have had their tax credits stopped because they've been told that they're living with a man of whom they have never heard, or indeed the tenant of the property prior to them having occupied it."

Fellow Tory backbencher Craig Mackinlay added: "All members of the House would have received a deluge recently of very harrowing cases of people who have had cause to have interaction with Concentrix.

"First of all they were unsure if this company even existed, if it was a scam. Trying to get through on the telephone is next to impossible.

"This is a service level that is unacceptable in the public sector."

Social Democratic and Labour Party MP Mark Durkan said Concentrix should not be used as a scapegoat, stressing that HMRC were responsible for drawing up the pay-by-results contract.

He said: "We should remember that the HMRC is not an innocent agent in this - it designed this contract, it specced customer hostility and suspicion in to the contract, and of course it was HMRC that were providing the names that were also targeted by Concentrix and this is against a backdrop where Government has persisted in running down the capacity and the character of HMRC."

Ms Ellison said HMRC has improved its performance over recent months and will continue to pursue new cases of error or fraud in the benefits systems.

She added that payments will be restored to claimants within a few days of their case being settled.

The number of requests to review decisions by Concentrix totalled 7,989 from April to mid-August this year, according to figures released to Parliament by the Department for Work and Pensions.

This compared to 2,042 review requests - known as mandatory reconsiderations - in 2015/16 and 436 in 2014/15.

Furthermore, 365 appeals were made against Concentrix's decisions in 2015/16 and 167 from April to mid-August this year.

Ms Ellison, in reply to a written parliamentary question, said: "The total number of appeals received is about 0.08% of all decisions SYNNEX-Concentrix made in the same period.

"The total number of mandatory reconsiderations received is about 1.6% of all decisions SYNNEX-Concentrix made."

She added: "Tax credits are often reinstated when information to support the claim is provided after the initial decision has been taken.

"Since November 2014 to mid-August 2016 the contractor has amended 6,755 decisions following the receipt of a mandatory reconsideration."

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