HM Revenue and Customs looks set to end its much-criticised tax credit fraud and error contract with US outsourcing giant Concentrix earlier than planned after a “fundamental failure of basic customer service”.
HMRC’s chief executive Jon Thompson announced last month that the tax authority would not renew its payment-by-results contract — set for expiry in May 2017 — with the firm because of its failure to deal with phone calls from thousands of customers whose tax credit payments were stopped.
Concentrix is no longer handling any cases for HMRC, and Concentrix staff who had been working on the contract are set to be transferred into the tax authority.
HMRC chief Jon Thompson confirms US firm Concentrix won't have tax credits contract renewed
HMRC to bring Concentrix staff in-house after tax credit "fiasco"
HMRC "borrowing from Peter to pay Paul" with Concentrix redeployments – PCS
As well as deciding not to renew the Concentrix contract when it expires in May next year, Thompson signalled to MPs on the Public Accounts Committee on Wednesday that HMRC was now planning an early exit from the deal.
“We are in the late stages, it’s best for me to put, of a legal conversation about how this contract essentially finishes,” he told the committee.
Asked whether this meant HMRC would scrap the contract sooner than May, Thompson replied: “I’m expecting that we will have something to announce within the next few working days about this contract finishing.”
"Fundamental failure"
The HMRC chief told the committee that levels of customer service had “deteriorated significantly” at Concentrix over the summer, with “less than 1%” of calls being answered within five minutes on several days in August. He said there had been a “fundamental failure of basic customer service” on the part of the contractor.
“There are stories of people having to ring 60 or 70 times, spending 45 minutes on the phone,” Thompson told PAC.
Thompson was also pressed by committee chair Meg Hillier on whether the department itself had done enough to ensure that Concentrix had had “the resources in place to deliver what they said they were going to”.
Asked whether the Concentrix problems were the fault of the contract or the contractor, Thompson replied: “It is my view that what happened here is they simply didn’t put enough people on the work.”
"If you say you’re going to plan to do something and you don’t do it, then something’s going to go wrong, isn’t it?" - HMRC chief Jon Thompson
He told the committee: “If a contractor says that they are going to put 140 people on the telephone and they don’t, people aren’t going to get through. If you say you’re going to plan to do something and you don’t do it, then something’s going to go wrong, isn’t it?”
Thompson said call waits for claimants contacting HMRC with tax credit fraud and error queries had been “averaging under 5 minutes” since the work had been taken back in-house.
The National Audit Office is currently conducting an inquiry into HMRC’s handling of the Concentrix contract.
The NAO’s investigation — which the public spending watchdog said would “review the performance of Concentrix and how HMRC has managed the contract” — is expected to be published before the end of the year.
"Clearly wrong"
Speaking to parliament’s separate Work and Pensions Committee earlier this month, Concentrix's senior vice president Philip Cassidy defended the organisation’s handling of the contract, and said he had been given just an hour’s notice before an HMRC press statement went out confirming that the tax authority would not be renewing the contract.
He told MPs: “I was about to get on a plane when I got a phone call saying, ‘This press statement is going out in 15 minutes’ — and I said, ‘That is not enough time for us to inform our staff. It is not fair’, and they did extend it and gave me time.”
Cassidy claimed that the firm had been “getting congratulations” from the HMRC team “days before the announcement” was made on the non-renewal of the contract, and quoted a September 7 letter from an unnamed official calling the Concentrix team “absolute stars”.
Pressed on those claims during Wednesday’s PAC hearing, HMRC chief Thompson said: “Mr Cassidy did not inform the committee who those emails were from. We’ve asked who they were from. They were clearly wrong.”