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UK Spending Watchdog May Investigate Concentrix Tax Credit Deal

HMRC has announced it won't renew a controversial deal with the US firm to investigate tax credits after hundreds of families reported their payments were wrongly stopped.

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An influential parliamentary committee is considering whether to launch an investigation into a deal between HM Revenue and Customs and US outsourcing giant Concentrix that, it was claimed, left hundreds of families without money for food and essentials, BuzzFeed News has learned.

HMRC announced on Tuesday evening it will not renew Concentrix's contract to investigate fraud and error in tax credit claims when it expires in May 2017, following reports from the BBC and BuzzFeed News that families had been left without money for weeks after being wrongly accused of mis-claiming their tax credits.

The Commons public accounts committee (PAC), which has oversight over HMRC and value for money in public contracts, said on Wednesday it was contacting the National Audit Office to see whether it planned to investigate the contract.

“The committee will consult with the National Audit Office on whether there would be value in a formal investigation of the contract between HMRC and Concentrix," a spokesman for the PAC said.

“Should the NAO investigate this matter then the committee has an obvious interest in following up value-for-money considerations.”

Concentrix has held the contract to examine tax credit fraud and error since May 2014, but faces allegations of wrongly stopping benefits and leaving families waiting weeks on appeal, and was said by HMRC to have missed its performance standards 120 times in 11 months.

One single parent from Stockport told BuzzFeed News her tax credits were stopped six weeks ago by Concentrix after the company mistakenly identified her daughter as her partner and concluded she was in an undisclosed relationship, leaving her struggling to pay for school uniform and other essentials.

A spokeswoman for the NAO told BuzzFeed News the watchdog had not yet been contacted by the PAC.

Louise Haigh, a Labour MP who was one of the leading campaigners on Concentrix, said the deal now needed formal scrutiny.

"It is hugely welcome that Concentrix are to be stripped of this contract after catastrophic performance failure," she said. "But huge questions remain about how the government – charged with overseeing this contract – did not hear the anguish from thousands of single parents and families over a prolonged period of time who were stripped of the tax credits which are their lifeline.

"This failure gets to the heart of the government’s welfare savings model, which encourages faceless multinationals to ruthlessly pursue the low-paid, the vulnerable, and the voiceless for profit. The prime minister needs to order a root-and-branch review and ask very serious questions about whether they can justify treating decent people – working all the hours they can, raising a family – in this way."

Haigh said she had also contacted the National Audit Office to request a formal investigation into the deal.

Speaking in parliament on Wednesday in response to an urgent question from Labour, Treasury minister Jane Ellison said Concentrix would not deal with new cases for the remainder of its existing contract, but instead work with HMRC on clearing its backlog, which Ellison said stood at around 2,500 cases and was expected to grow.

Ellison said 150 HMRC staff had been redeployed to help work on the backlog, but dismissed calls for any official inquiry.

"I don't think there's any need to get into inquiries etc etc,” she told MPs.

A spokesman for HMRC said no decision had yet been made on whether tackling tax credit fraud and error would be outsourced again or taken back in-house when Concentrix's contract expires in May 2017.

In a statement on Tuesday evening following the announcement that its contract would not be renewed, Concentrix fiercely defended its record.

"We have operated professionally at all times and within the guidance set by HMRC," it said. "The HMRC statement not to renew the contract attacks our professional credibility, and the commitment of our staff who have performed determinedly, despite the issues with HMRC policies and procedures.

"In addition, throughout the contract, Concentrix has employed good hard-working people within the UK, at Concentrix expense, in order to staff phone lines and handle customer calls which were agreed by HMRC and were based on HMRC assumptions."

James Ball is a special correspondent for BuzzFeed News and is based in London. PGP: here

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