Civil Service Pensions: Capita

Question

Asked by

To ask His Majesty’s Government what actions they are taking in light of recent reports of problems arising from the transfer of Civil Service Pensions administration to Capita.

My Lords, the service being experienced by some members of the Civil Service Pension Scheme is totally unacceptable, and I apologise for the distress caused to members. We have established a recovery taskforce led by HMRC’s Second Permanent Secretary and have deployed a 150-person government surge team to help to support recovery of this service. Interest-free bridging loans of £5,000, and up to £10,000 exceptionally, are available for those in hardship. We are holding Capita to account through rigorous performance indicators and financial penalties.

I thank my noble friend for her Answer and I am pleased to hear that the Government are seized of the seriousness of the situation. I hope my noble friend has had the opportunity to read the Westminster Hall debate yesterday, when MP after MP, speaking on behalf of their constituents, described the extreme circumstances that they were facing, from the bereaved not receiving death benefits to new pensioners having to wait months for their benefits. Obviously, the priority must be to get benefits to members. However, does my noble friend agree with me that perhaps the answer lies in the Labour Party’s commitment to bring about

“the biggest wave of insourcing of public services for a generation”?

My Lords, it might be helpful if I lay out what the Government are doing. I know that many Members of your Lordships’ House may have been contacted for details, not least because they may be members of this scheme. If there are specific concerns or cases that people have raised with Members of your Lordships’ House, I have sought assurances that we will have the same access to the services being provided to MPs for casework in this instance and can share details with noble Lords. As regards the contract and the issue of insourcing, this contract was signed in November 2023 and came into place last year. While there may be questions about insourcing and other contracts, that simply is not going to be able to be done with this contract.

My Lords, the transfer of British Army recruiting to Capita was a total shambles. What lessons were drawn from that experience and what precautions were put in place before handing Capita the responsibility for the administration of Civil Service pensions?

My Lords, I think many of us have had different experiences with Capita in different contracts over time. I fear that I may be on the record not calling it “Capita” in other parts of Parliament. Specifically, noble Lords may be aware that the Public Accounts Committee in the other place raised concerns about this contract last summer and therefore a whole series of assurance reviews were undertaken and put in place. There are ongoing issues about what has happened and how it has happened, but the priority at this point has to be how we prioritise those who are waiting for deferred salary, but also, at the most extreme end, people who have died in service and who have taken ill-health retirement. To reassure noble Lords, the recovery plan expects that those cases will have been caught up and dealt with by the end of this month, and the hardship loans have started to be paid this week.

My Lords, the Cabinet Office told the Public Accounts Committee last year that it was aware of very significant problems with Capita’s preparations to take over the contract on 1 December and that the Cabinet Office had a contingency plan ready to use if necessary. Why, therefore, did the Cabinet Office decide to go ahead with the 1 December transfer to Capita rather than invoke its contingency plan?

My Lords, the noble Lord is absolutely right that this was discussed by the Public Accounts Committee last year. Following that, and the assurances we got before it went live, the Paymaster-General met with Capita and it confirmed 194 full-time equivalent staff put in place to mitigate delays in automation testing, contingency plans and triaging arrangements, and then a series of independent assurance reviews were undertaken in advance. That is not to say that there are not now serious concerns about what has happened in the last month.

To be clear, our priority at this point is fixing what is broken and making sure that the system stands up. This is a very complicated pension system: it is the third-largest in government. However, I am sure that there will be numerous opportunities to discuss what went wrong and what we need to learn from this. But I want to assure noble Lords that we are taking this with the utmost seriousness, which is why Angela MacDonald, the Second Perm Sec at HMRC, is leading the recovery taskforce. There is a 150-person government surge team supporting the Capita contract, and we are working with Capita and meeting it every day to make sure that these KPIs are being met.

My Lords, can the Minister confirm that one of the areas that will be prioritised—I do not know whether she is aware of this—is that former Civil Service employees who are living overseas now cannot access the online portal, so, in addition to not being able to get through on the telephone, they cannot use the online service at all. Can that be fixed as a matter of absolute urgency for those people?

I can reassure the noble Baroness that, as part of the recovery taskforce timetable, we expect that the online portal will be up and running in its completion at the end of next month. By the end of this month we are prioritising dealing with the people who cannot access money and those who desperately need it in terms of hardship. So, yes, I can give an assurance that by the end of next month the portal will be fully operational.

My Lords, in the wake of the Post Office scandal, we have seen the Government continuing to give contracts to the company that behaved so badly in relation to Post Office employees. Can the Minister assure the House that Capita will not get the same sort of treatment and that its behaviour in this particular contract will be used in evidence when weighing up similar contracts?

With regard to Fujitsu, I think the noble Baroness will be aware that there are ongoing issues that relate to the Horizon scandal. With regard to Capita, there are two companies at play here: the company and whether it fulfilled its responsibilities for the previous provider and what Capita actually inherited, which was double the backlog that it was expecting. So there are more complex issues at play here and I am sure that, in the coming months, we will be discussing this in great detail in your Lordships’ House.

My Lords, whatever the failings of the contractor, the agreement will contain options for the contractee, but those potential remedies are only effective if the contracting authority itself is on the case relentlessly. Can the Minister tell the House what concrete steps the Civil Service has taken over the years to improve the quality of its contract management? No well-run business would tolerate a contractor underperforming in this way, so why should the Government allow such behaviour?

I want to be very clear that this was a contract signed by the noble Baroness’s Government in 2023, and we are now managing the contract that they signed. As regards where we are in holding Capita to account, we have withheld £9.6 million in transition payments up until this point, from a contract value over seven years of £285 million. That is a significant withhold at this point. We are making sure that Capita is meeting its KPIs and we are meeting it every day as part of the recovery taskforce. However, the noble Baroness is absolutely right that a great number of public procurement challenges relate to the original contract and all this needs to be looked at in the round.

My Lords, the challenge of contacting many people affected by this is that some of them may not be digitally proficient and may be digitally excluded. What measures are the Government putting in place to make sure that those who are digitally excluded or not digitally proficient can be contacted and made fully aware of the issue?

The noble Lord is absolutely right and there are various mechanisms being put in place, not least the call centre, which people should be able to access. I want to touch on something explicitly because the noble Lord has raised an important point. Some of the most heartbreaking issues that have come to light relate to people who have experienced death in service and bereavement. Therefore, they are receiving calls but not necessarily with the data on service, never mind their digital proficiency. So we have asked government departments to engage directly with the families of their former staff, to arrange the hardship payments in that case, and individual government departments that were the original employers are managing that, which is how we are able to ensure that the money is getting into people’s bank accounts within days, not weeks or months.