Ministers have been accused of showing a "complete lack of urgency" in responding to accusations that a Government contractor was incorrectly withdrawing tax credits from hundreds of claimants.
Labour MPs have demanded the Government apologise on behalf of Concentrix which was tasked with reducing fraud and error in the tax credits system.
The Government has already said the contract will be terminated after claimants wrongly had their benefits scrapped and Treasury Minister Jane Ellison confirmed HMRC is negotiating an early exit from the contract with the firm.
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But Labour has called on ministers to go further and investigate the conduct of the company, compensate victims and to apologise.
Leading an opposition-day debate on the subject, shadow treasury minister Rebecca Long-Bailey accused Concentrix of "unfairly and unjustly stopping people's tax credits" as she urged the Government to say sorry for the "distress and hardship" caused.
She said: "I think the cases that we have seen so far are the tip of the iceberg and the Government has a responsibility to ensure that all cases are adequately investigated to make sure that no one has fallen through the cracks and not presented themselves to either their MP or contacted Concentrix direct."
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She also criticised the Government for agreeing to a "payment by results contract" as she said there had been "red flags" that ministers should have acted on.
Meanwhile, Clive Efford, the Labour MP for Eltham, intervened and said: "What we have got is a complete lack of urgency from the Government opposite.
"People are left destitute with these decisions for no good reason.
"What we want to hear from the Government is that they are going to put some extra resources in to expedite investigations into these cases so that these people are paid out and compensated and if necessary at the expense of Concentrix."
Treasury Minister Jane Ellison said HMRC had taken back 181,000 cases from Concentrix that were incomplete and that 98% had been resolved.
She also insisted action had been taken to help people in difficulty.
She said: "I want to reassure members that we have a system in place to support anyone who contacts HMRC in such circumstances.
"They will be helped to request a review of the decision taken, the so-called mandatory reconsideration that I have just mentioned.
"Those in hardship will then receive a £100 payment, normally the following day while their review is being handled."
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Ms Ellison said the Government is "making some progress to at least put an end to the distress and worry some people have regrettably faced".
The Treasury Minister confirmed reports that HMRC is looking to bring the services provided by Concentrix back in-house immediately rather than waiting for the end of the contract next year.
She said: "I can confirm that HMRC are in discussion with Concentrix to agree a negotiated early exit from the contract."
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