Two public sector outsourcing contracts have come under fire as HM Revenue and Customs ends a contract with one provider and a London council and its supplier face a legal dispute over non-payment of the minimum wage.
HMRC has said it will not extend its contract with Concentrix, a company to which it outsourced tax credit entitlement checking, when the deal ends next year.
US firm Concentrix was originally employed in 2014 to help HMRC reduce tax fraud and ensure claimants were paid the right tax credits.
But it was embroiled in scandal when it was accused of unfairly stopping payment of credits to several claimants. In one case, a 19-year-old single mother was denied tax credits because Concentrix wrongly claimed she was married to a 74-year old man who was actually dead.
HMRC chief executive Jon Thompson said: “We want to reassure customers who have had their tax credits stopped that we will prioritise their cases, and make sure that they are processed as quickly as possible.
“While it’s right that we ensure that tax credits customers only receive the money to which they’re entitled, it is vital that those customers have a high level of service.”
HMRC is redeploying 150 staff to help resolve disputed cases previously dealt with by Concentrix.
The original contract was estimated to be worth between £55m and £75m over three years and HMRC claims that so far it has saved the taxpayer £280m.
Meanwhile, London’s Haringey Council and outsourced care company Sevacare are being taken to court by 17 homecare workers for non-payment of the minimum wage.
The group – all but one of whom are women – are employed on controversial zero-hours contracts to care for elderly and disabled residents.
They are claiming Sevacare failed to pay staff a legal minimum wage of £7.20 an hour, as time spent travelling between people’s houses was unpaid.
Unison, which is representing the workers, said that on a typical day the women might be working away from home for as many as 14 hours, but could receive payment for only half of them.
Unison general secretary Dave Prentis said companies like Sevacare were “coining it”.
“Last year Sevacare’s profits were over £1m, yet bosses thought it acceptable to pay its staff illegal poverty wages,” he said.
“Unfortunately this sorry state of affairs is not unique to Haringey. Up and down the UK, the experience of other home care workers is depressingly similar.”
Unison said a 2014 National Audit Office report suggested that as many as 220,000 homecare workers may be being paid an illegal wage.
Nineteen local authorities have now signed up to the union’s Ethical Care Charter.
A Sevacare spokesperson said: “While we cannot comment on the ongoing tribunal, we have always paid our staff an average hourly rate that is at least the national minimum wage for any hours they have been contracted to work.”