Monday, 23 January 2017

Contractual disgrace

I am not at all surprised to have learned this week about this government’s determined attempts to hush-up the disgraceful story of the performance of Concentrix – a US-based company – which had been contracted by HMRC to prevent fraud and reduce error in the administration of tax credits.

It is only through the persistent questioning of the government – and I congratulate my colleague Louise Haigh (MP for Sheffield Heeley) for her significant contribution to this – are we beginning to get to the truth about what has happened. If I were a conspiracy theorist, I’d be tempted to the view that this week’s publication of a National Audit Office (NAO) report on the affair had been timed to ensure minimal publicity, whilst the media was focused on Brexit issues.

Tax credits were introduced in 2003, but this government has systematically reduced their value. In 2014, the government contracted Concentrix to cut fraud and error in the system. This would be done by stopping the benefit being paid to some claimants.

Thousands of families in receipt of tax credits complained that they had been wrongly sanctioned; their benefits were just stopped, sometimes for months, without justification. Not only couldn’t families pay their bills, but children were refused school dinners because their benefits had been stopped.

Staggeringly, given the massive scale of failure to deliver the contract properly, Concentrix argued that it needed to be paid more than the contracted commission of 3.9% and negotiated this up to 11% in August 2015.

The NAO found that Concentrix had stopped or cut tax credits in 108,000 cases in less than 2 years, but almost a third of those decisions were overturned after a mandatory reconsideration. So, more than 30,000 families had been badly affected, with many brought to the point of destitution.

The contract required 90% of calls to Concentrix to be answered within 5 minutes, but for much of the time it was answering fewer than 5% in time. In August last year, Concentrix simply didn’t answer the phone to 19,000 claimants.

By September 2016, there was a backlog of 181,000 cases.

Although the contract was supposed to run until May this year, HMRC finally ended the contract with Concentrix in November 2016, and brought the work back in-house.

In the last two month’s data, it is revealed that 89% of those families which had their cases reviewed secured re-instatement of their tax credit.

The contractor’s performance was so disgraceful, it should simply be banned from working for the UK public sector for a decade. Ministers and senior civil servants who oversaw this shambles should be brought to account for their contribution.