An official National Audit Office report into a controversial outsourcing project handling tax credits has reported a litany of missed targets, backlogs, and IT failures – but found HMRC increased payments to the contractor regardless.
The deal was between the UK's tax authority HMRC and US outsourcing giant Concentrix, giving the firm the power to check hundreds of thousands of tax credit cases for fraud and error.
Last year BuzzFeed News revealed how hundreds of people were accusing the company of wrongly stopping their tax credits – which are often essential for people to pay bills, feed their families, or get childrens' school uniforms – based on inaccurate information.
One such case was that of 49-year-old Royal Mail worker Tricia Williamson, whose credits were stopped after Concentrix wrongly identified her 31-year-old daughter, with whom she lives, as her partner.
Even though Williamson provided documentary evidence to prove her case, Concentrix nevertheless stopped her tax credits and she went more than six weeks without money.
“My eldest daughter has had to buy my youngest her school uniform for this year. I’m nearly 50, I shouldn’t be living off my kids," she said at the time.
“My daughter’s been stuck at home all through the holiday – there’s no money for her to do anything with her friends. A Concentrix adviser said I should go to a food bank. I don’t need food, though – I need money for school buses and uniforms.”
Amid growing concern from MPs and others, HMRC announced it would not be renewing Concentrix's contract last September, and the two parties agreed to end the contract early two months later. HMRC has said it has no plans to find a new outsourcing company to take over the role, instead opting to bring it back in house.
The NAO report into the fiasco laid bare a series of damning conclusions regarding the deal, including:
- Between November 2014 and September 2015 Concentrix hit just 104 of its 242 monthly performance targets.
- The contract, which was initially hoped to save the taxpayer around £1 billion, saved just £193 million.
- By September 2016 there was a backlog of more than 181,000 open cases, leading to a huge volume of calls to complain, overwhelming the switchboard.
- In October 2015 HMRC amended to contract to increase Concentrix's commission from between 3.9% and 6.9% to 11%.
Overall, the report concludes the contract "did not work as HMRC intended".
Labour MP Louise Haigh, who was one of the first to raise concerns about the deal in parliament, accused HMRC of treating "hard-working single parents and families as fair game in their efforts to cut costs".
“This contract not only failed abysmally, but shamefully throughout both Concentrix and HMRC showed a level of neglect that should have no place whatsoever in our welfare system," she said.
“Despite repeated failures – failures which left single parents and families begging for the payments which were their lifeline – HMRC shockingly rewarded Concentrix by increasing their commission and downgrading performance targets.
"This sent a chilling message that the government were far more interested in helping their contractor to make money than they were in doing the right thing for tax credit recipients."
Frank Field MP, the chair of the work and pensions committee, said HMRC needed to make sure it reimbursed any families affected.
"The final chapter of this devastating tale has now been published. It makes for grim reading for HMRC, Concentrix, and families in receipt of tax credits," he said. "My constituents who were wrongly denied cash to feed their children will totally relate to the catalogue of problems identified by the NAO.
"It is important, of course, for HMRC to learn the right lessons from these problems. Equally important in the short term, though, is to reimburse my constituents – and many other families on low incomes across the country – who went without food and got themselves into huge amounts of debt while Concentrix wrongly withheld their tax credits."
A spokesperson for Concentrix issued the following statement:
"We welcomed the opportunity to engage with the National Audit Office in its inquiry. This was a hugely complex contract and programme, and as the report highlights, a number of issues emerged at the outset which laid the foundations for the challenges experienced throughout, particularly last year. We look forward to discussing the report with the public accounts committee in order to ensure all lessons can be learned."