The chief executive of HM Revenue & Customs has told MPs that problems with the nation’s tax credits system run deeper than the failed contract with outsourcing firm Concentrix.
Jon Thompson also confirmed to members of the Treasury Select Committee today that HMRC was working towards a mutually-negotiated early finish of the fraud and error-checking deal ahead of its scheduled May 2017 end.
In his third appearance before a select committee in just two weeks, Thompson accepted that Concentrix’s failure to answer phone calls from tens of thousands people whose tax credits were stopped as a result of the company’s fraud investigations was not the only problem with the welfare payments.
Concentrix row: HMRC chief Jon Thompson hints at early end to troubled tax credits contract
HMRC to bring Concentrix staff in-house after tax credit "fiasco"
HMRC’s Jon Thompson: Concentrix debacle calls private sector incentive payments into question
“This is not a binary thing in which the tax credit system in this circumstance is entirely about Concentrix,” he said.
“There are other things about the tax credit system which are sub-optimal. And there are other areas where we have to accept responsibility for what’s happened.
“I’m not saying this is 100% a Concentrix issue. The tax-credit system is… I could use other more colourful language if you like… but it’s deeply flawed and the government’s long-term position is to stop tax credits all together.”
Thompson did not give a detailed breakdown of HMRC’s own shortcomings in relation to the processing of tax credit fraud and error checks.
However, he did accept that there was scope for reviewing the way HMRC identified the large volume of cases it had passed on Concentrix, which the firm was tasked with conducting further investigations into.
“Was the 1m right in the first place?” he said. “That’s something we could have a look at.”
Last month Thompson announced that Concentrix would not get its HMRC contract renewed because of the customer-service shortcomings that began in August and which left thousands of tax-credit recipients out of pocket and without a way of rectifying the situation.
Earlier this month it emerged that the tax collection agency was planning to bring the Concentrix staff currently working on the tax-credit contract in-house. Formal details of the early finish of the Concentrix contract are expected to be announced in the coming days.
MPs on Thursday asked Thompson what the likely cost of running the checking operation in house would be, in contrast with the payment-by-results model on which Concentrix operated. No figures were available.
Concentrix’s contract was worth up to £75m, and MPs have been told that the payment-by-results element is estimated to result in a £27m payment to the company in response to £270m of wrong payments identified.
Two weeks ago Thompson told the Work and Pensions Select Committee that Concentrix's performance had raised clear questions about the the kinds of public-service work that payment-by-results contracts should be applied to.