By Lori Inglis-Hall @LoriInglisHall – Welfare Correspondent
For most claimants, the first indication that anything was amiss was when they checked their bank accounts and discovered their tax credits were missing. Others received a letter from HM Revenue and Customs (HMRC) informing them their tax credits had been overpaid, often by thousands of pounds. Some claimants also received a second letter from a company called Concentrix, informing them they failed to comply with an investigation into their tax credit claim, and thus were no longer entitled to the benefit. No further information was supplied.
Previously administered by HMRC, since 2014 the American Concentrix – a subsidy of Fortune 500 company, Synnex – was employed to assist with tax credit fraud investigations. The three year £75million pound ‘payment by results’ contract was part of the departments’ drive to cut its operating costs, with projected savings of £285million in 2014/15. Due to shambolic delays at the beginning of the contract (an IT failure left Concentrix staff unable to do any work for three months) the National Audit Office reported the benefits of the contract had been ‘lower than anticipated’. HMRC reported savings of just £2.3million in 2014/15, less than 1% of what was expected.
In 2015/16 however, Concentrix did a lot better, delivering projected savings of £122.3million, and £159million estimated for 2016/17. This vast increase is tied to a sharp rise in the number of tax credit claims found to have been overpaid, either through fraud or error. In April, Concentrix received 1.5million records from HMRC in which there was believed to be a risk of fraud. From these records, Concentrix (and their ‘third party analytic providers’) identified 324,000 cases where they believed overpayment had occurred. Philip Cassidy, Senior Vice President of Concentrix, described the process to the Work and Pensions Select Committee;
‘The process is really designed around the fact that if there is a risk, you have to follow a process to get evidence to say that either that risk is there or it is not … According to the process as we have to enforce it, the first burden of proof is on HMRC and Concentrix, and the other burden of proof is on the claimants, which is a big part of the issue in this cycle … The burden of proof is on the claimant, and therefore if they don’t provide the evidence, we mark it as not provided. As part of that it goes through a cycle and HMRC stop the payment. There has been a lot of discussion about Concentrix stopping the payment, but the payment is stopped … On our recommendation, only following a process.’
Alas, when people did receive a request for evidence from Concentrix, many of them ignored it because they didn’t recognise the company’s name and thought it was a phishing scam (HMRC and the Treasury insisted Concentrix use it’s own letterhead). Secondly, countless claimants have alleged that even when they did send their evidence to Concentrix, the company claimed not to have received it, despite evidence such as postal tracking.
It isn’t clear just why from 2015 there was such a steep increase in the number of cases in which tax credits were stopped due to an overpayment. Despite the sudden rise in cases of apparent fraud, no alarm bells appear to have rung at HMRC. In a recent Westminster Hall debate a link was suggested between Concentrix’s ‘payment by results’ contract and the rise, with the company accused of going on a fishing expedition to boost their profits.
Upon closer examination of Concentrix’s investigations, there is room to back such a claim. The utter absurdity of some accusations would be funny, if the results hadn’t pushed many families into severe hardship. One woman was accused of being in a relationship with a man named Joseph Rowntree, and not a single parent, as she had claimed. In fact, she rented a flat from the Joseph Rowntree Foundation, a housing association named after the famous philanthropist and Quaker. Joseph Rowntree died in 1925, but Concentrix recommended her tax credits be stopped, and the woman was forced to survive on handouts from a foodbank. Concentrix have also accused a number of claimants of being in a relationship with the newsagent RS McColl. They too had their tax credits stopped and were forced to go through a lengthy appeals process to have the benefit reinstated, which saw them forced to survive on little for weeks on end. In the period April to October this year, some 7000 claimants had their tax credits stopped by recommendation of the company.
In October Concentrix told the Work and Pensions Committee that the success rate of appeals in which tax credits are fully restored is between 90-95% (although HMRC dispute this and place the figure closer to 74%).
But for many claimants, by the time they reach the point of a successful appeal, the damage has been done. They had to feed their families above all else, so bills went unpaid, and debts mounted up. Claimants have been harassed by bailiffs and debt collection agencies; they have been served with eviction notices. For a Government apparently intent on tackling child poverty, this mess has seen thousands of low income and vulnerable families plunged into hardship.
Claimants have been accused of being in relationships with their landlords, neighbours, with the deceased, and ex-partners who they haven’t seen in years. They have been told they have failed to inform HMRC of changes in their circumstances – an increase in employment hours for example, or a childcare arrangement – when no such change has occurred and with little evidence of why Concentrix or HMRC thought they had. But it gets worse, because for the most part the company appears to have targeted single parents, and in particular, women. In a recent Westminster Hall debate, Kate Green, Labour’s former shadow work and pensions minister, argued;
‘It’s clear that the deliberate intention of the contract was to target single parents on the basis of assumptions that they were living with a partner and not reporting it. It returns to attitudes of single women bringing up children – that somehow they must not be respectable and they need to be investigated.’
Fiona Mactaggart, the former Labour shadow equalities minister agreed, adding;
‘This was a gendered contract … Constituents feel harassed, scared and pinned up as targets by the way that this has occurred. It’s not acceptable in a civilised society to treat mothers in this manner. The way we have treated the Mums and Dads who are bringing up the next generation on low pay has been shameful.’
What is clear, is that Concentrix were completely unequipped to manage such a large caseload. For claimants, already panicked by the sudden and often unexpected removal of a crucial benefit, the effect was catastrophic. That is, if they could get through to Concentrix at all.
Claimant Marie Crowley told the Work and Pensions Committee;
‘It is being on hold for days on end and giving up after 90 minutes because when you only have your mobile phone and it is an 0845 number, that is a lot of money. My phone bill in September was double what it should be. When you do not have any money coming in from tax credits each week, having to then think about having to pay double is just like another kick in the face, really.’
Sarah Broome, a single mother with a disability, added;
‘I rang one day, the worst day, continuously—redial, redial—because I was getting the engaged tone. I recorded that I tried to ring them and got the engaged tone over 70 times, and then I gave up for that day. I checked my mobile phone bill and I recorded that I had been on the phone to HMRC and Concentrix over this six-week period for 19 hours and 57 minutes, more so in the last three or four weeks. I had also used my parents’ phones and friends’ phones, so I am not sure of the total figure, but just that figure alone shocked me, because this has consumed my life and my family’s life.’
From mid-August 2016, claimants were waiting an average of 31minutes to get through to Concentrix, with 90% of calls failing to get through at all. When claimants did get past this barrier, they found themselves dealing with overly-stressed and under-trained call centre staff. Paul Eite, a single father of two, was informed he had been over-paid £5,110 by HMRC in August. He spoke to Real Media about his experience of dealing with Concentrix;
‘Due to the systems used, HMRC could not view your file once it was passed to Concentrix, so you had to deal with them directly which meant you never received a straight answer at all. I was hung up on, snapped at, and even called a liar by Concentrix.’
A whistleblower from Concentrix’s Belfast call centre told the BBC staff had to deal with suicidal benefit claimants. He described such calls;
‘…people crying down the phone to you that they’re down to their last bag of wipes, have no food in the fridge to feed their kids. We were dealing with people claiming they were going to commit suicide … Some of the [call centre workers] that were dealing with the suicide calls weren’t given the back-up, weren’t given aftercare by our aftercare team. Most of the people weren’t even trained in how to deal with a suicide call.’
Yet still, the contract carried on with no apparent concern voiced by HMRC. Until that is, momentum began to pick up in a Facebook group called ‘Concentrix Mums’.
Set up by claimants who had been through the appeals process already, at its peak the group had more than 11,600 members. Paul Eite told Real Media;
‘If it was not for [the Facebook group] a lot of people, myself included, would never have known just how widespread this issue was. The group was invaluable … in getting advice and support from people in exactly the same situation … The group gave good advice thanks to people who had worked within HMRC or general tax areas, plus people who had their claims sorted out quickly and could explain the process.’
When the scale of the crisis became apparent, ‘Concentrix Mums’ approached the Victoria Derbyshire programme on the BBC. Following their appearance, the Work and Pensions Committee invited several members of the group to give evidence to the Committee. The Facebook group also uncovered evidence of what they believe is an enormous data protection breach, after an estimated 100 claimants received other people’s documents from Concentrix, including bank statements, tax returns, and national insurance numbers. With the Government providing apparently little oversight of its £75million contract with Concentrix, a Facebook Group of determined parents stepped into the breach. Finally, HMRC took action.
In late October, HMRC informed Concentrix it would not be renewing the company’s contract in 2017. The company told the Work and Pensions Committee that it was given just fifteen minutes notice of the news, and had previously been told by HMRC as late as September that the contract would be renewed. Mhairi Black MP, a member of the Committee, questioned whether the move was a ‘case of PR damage control’. After further outcry in the House of Commons and in the press, HMRC announced it would be taking its fraud investigations back in house with immediate effect.
The debacle begs the question – is outsourcing ever compatible with the welfare state? For a Government so keen to bring private corporations into the public sphere, there seems to be a severe case of institutional amnesia at the heart of the civil service, and a lack of inclination amongst ministers to learn from their mistakes. Time and time again the same old story seeps out into the press; large sums of public money handed out to private companies, little to no oversight by government departments, a lack of return on promised savings, and sheer and utter incompetence. Worse, the abuse of the most vulnerable and in this case, the Government’s most beloved social grouping, hard-working families. Think A4E back in the coalition days and workfare, think Atos and Capita and the travesty of PIP and work capability assessments.
When people are treated as units, and when payment is linked to profit, the reality of the lives behind the paperwork is forgotten. That low-income families, people with disabilities and children, were being plunged into poverty on the thinnest of evidence appears to have barely been a consideration. As for HMRC – it wasn’t their problem, they’d passed it over to Concentrix for a huge fee and that was that – until a group of determined parents took it to the press and reminded them that it is the Government’s problem. The involvement of private companies removes the most important tenet of welfare in this country – that at it’s heart, it is an invaluable safety net provided by the state.
The tax credits scandal is not over. The administration of fraud investigations may have been taken back in house but tax credits are still being stopped by HMRC (who seem keen to turn claimants’ details over to another private company, Advantis, a debt collection agency). But this debacle has shown that when the Government turns a blind eye to its responsibilities, when it stands by as thousands of vulnerable people are failed and left high and dry, those people will not just stand by and allow themselves to be trampled. At the heart of this affair, the people most affected spoke up, and ensured they were heard.