Parliamentary Committees and Public Enquiries
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Concentrix 'meltdown' highlights risks in tackling benefit fraud and error

The Public Accounts Committee publishes a review of Government progress in two areas: the implementation of Universal Credit and efforts to reduce fraud and error in the benefits and tax credits systems.

Report findings

The Committee's most recent Report on Universal Credit was published in February 2016 and most recent Report on fraud and error in October 2015.

The Committee concluded the Government's response to the recommendations in these Reports "were weak, and we were not convinced that either department was doing enough to address our concerns".

The Department for Work & Pensions (DWP) and HM Revenue & Customs (HMRC) were therefore recalled to give further evidence.

"Departments need clearer plans to reduce fraud and error"

In this new Report, the Committee welcomes the departments' decision to revise their positions on two of its previous recommendations on fraud and error—to take action on underpayments and on reviewing claimants' experience of the tax credit process.

However, it finds the departments need clearer plans to reduce fraud and error in areas such as cohabitation and claimants pretending to live in the UK who live abroad.

The Report states: "Recent issues relating to HMRC's contract with Concentrix to investigate suspected fraud and error by tax credit claimants highlights the need to get these plans right."

Department expects Universal Credit complete in March 2022

The Committee calls on DWP and HMRC to set stretching targets for fraud and error across all benefits and tax credits "to secure better performance, review these targets annually, and report progress to the Committee".

On the day the Committee took evidence for this progress review in July (Universal Credit: progress review oral evidence, and Fraud and Error Stocktake: progress review oral evidence), DWP released a statement setting out further delays to the roll-out of Universal Credit which it now expects to complete in March 2022.

Concerns over staff using underdeveloped systems to implement Universal Credit

In its Report, the Committee calls on DWP to set out clearly by March next year "what impact these delays will have on operational costs, staff and claimants on both Universal Credit and legacy systems".

The Committee is concerned DWP "has not updated its assessment of the expected benefits of Universal Credit in the light of policy and operational changes" and reiterates its call for DWP to set out clearly the changes to the programme's business case since the outline case was produced in 2015.

The Committee also highlights concerns over pressure on staff tasked with using new and underdeveloped systems to deliver Universal Credit, as well as difficulties faced by claimants whose pay or rent are based on four-weekly periods.

Chair's comments

Meg Hillier, Chair of the PAC, said:

"Introducing Universal Credit and tackling fraud and error are significant challenges for the Government, with serious implications for the lives of many people.

Reviews like this are a vital tool in holding Government to account for progress on such complex projects. They also serve to focus the attention of officials on delivering results for service users.

The recent meltdown in performance of HMRC’s contractor Concentrix highlights just how important it is to keep progress in the spotlight.

When we took new evidence from HMRC on 26 October, the department's Chief Executive and Permanent Secretary admitted there had been a 'fundamental failure of basic customer service' from Concentrix and HMRC had to step in to sort out the mess.

It is completely unacceptable that benefits claimants should be left in the position of being unable to pay for their daily needs.

At the same session, HMRC indicated it expected to make an announcement in 'the next few working days' about finishing the Concentrix contract, which we already know will not be renewed from May 2017.

So far this announcement has not materialised.

HMRC must do more to safeguard the interests of claimants as part of its strategy to address fraud and error and we will expect to see effective measures in place as a matter of urgency."

Report summary

Universal Credit is a major reform of the benefit system which the Department for Work & Pensions (the Department) expects will lead to significant economic benefits.

After early failings, which we and the previous Committee have reported on, the Department is rolling out Universal Credit gradually and it has accepted the need for better contingency planning as we suggested.

However, the programme is still at a very early stage, with important systems and policies still in development, and the Department has yet again delayed and extended the roll-out of the programme by a further year. It now expects to complete the programme in 2022.

Despite rejecting previous recommendations, Department has revised their position

Fraud and error in the payment of benefits and tax credits remains a significant problem for both HM Revenue & Customs and the Department for Work & Pensions. There has been no real change in the level of fraud and error since we last reported.

After rejecting the committee's recommendation, we are pleased that the departments have revised their positions on two of our previous recommendations—to take action on underpayments and on reviewing claimants' experience of the tax credit process.

Cohabitation and claimants living abroad need clearer plans

While it is encouraging to see the departments targeting the causes of losses, such as misreported income, they also need clearer plans to reduce fraud and error in other challenging areas such as cohabitation and claimants pretending to live in the UK who live abroad.

Recent issues relating to HMRC's contract with Concentrix to investigate suspected fraud and error by tax credit claimants highlights the need to get these plans right. We remain disappointed by the absence of stretching targets for tackling fraud and error.

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