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Government decision comes after barrage of complaints that HMRC contractor was wrongly removing benefits from claimants

Thousands of low-income families who were stripped of their tax credits by a controversial US contractor are to have their cases reviewed, the government has said.

Concentrix, which was originally brought in to cut fraud and error in the tax credit system, was sacked last year by HM Revenue and Customs (HMRC) after a barrage of complaints by MPs and in the media that claimants were wrongly having their benefits removed.

In a report to MPs, the government disclosed that of 36,000 claimants who lodged an appeal against a ruling by Concentrix, 87% saw their claim upheld and their benefits reinstated.

It said the remaining 23,000 claimants (from the 59,000 in total) whose benefits had been cut by the company but did not appeal would now have their cases reviewed. “HMRC will review those cases to establish that decisions made by Concentrix were properly made and communicated to claimants,” it said.

The government also promised it would no longer outsource tax credit fraud investigation work to private companies. MPs warned that profit-making companies were financially incentivised to strip claimants of benefits. The work has since been taken back in-house at HMRC.

A scathing Commons work and pensions select committee report published in December castigated both Concentrix and HMRC for a series of disastrous errors that it said amounted to “a gross failure of customer service” and a “sorry episode for the welfare state”.

MPs said claimants suspected of tax credit fraud had been targeted on the flimsiest of pretexts and their entitlements withdrawn on a “cut first, think later” basis.

Many were left without benefits for months, in some cases forcing them to borrow from payday lenders and rely on food banks.

Concentrix’s chaotic handling of the contract was compounded by the virtual collapse of its understaffed call centre in August because of the volume of calls from claimants. One mother told MPs she had spent nearly 20 hours on the phone trying to resolve her claim.

HMRC hired Concentrix in 2014 to check if tax credit claimants had fraudulently misled officials about cohabiting partners, work status or childcare costs. Although officials expected the three-year contract to recapture £1bn, Concentrix saved just £193m, for which it was paid £32.5m.

Frank Field, the work and pensions committee chairman, said he was pleased that ministers had accepted the recommendations of last year’s report. “HMRC was right to fire its contractor, but many of the processes used by Concentrix were the same as those used by HMRC itself,” said the Labour MP. “For many claimants, particularly those who were unwell, lacked self-confidence or had caring responsibilities, the document-heavy process of challenging a wrong decision by Concentrix was surely prohibitively daunting.”

A HMRC spokesman said: “It is important to make checks on tax credits payments to ensure the right people are receiving them under the law, and this work will now be done by HMRC.

“We will not be entering into external contracts for this in future. We apologise to all those who did not receive the standard of service that they should have.”

Source: https://www.theguardian.com/society/2017/feb/06/families-stripped-tax-credits-concentrix-hmrc-cases-reviewed

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