Bosses at outsourcing giant Capita have told MPs they followed routine industry practice in preparing to take over administration of the Civil Service Pension Scheme, and were given “incomplete” information about the scale of casework backlog being handed over.
At a session of parliament’s Public Accounts Committee yesterday, chief executive of Capita Public Services Richard Holroyd and Capita Pension Solutions managing director Chris Clements insisted the scale of the workload was not made clear.
MPs heard that there is now a backlog of around 120,000 cases, up from 86,000 when Capita formally took on administration of the pension scheme on 1 December last year. Thousands of newly-retired scheme members are still waiting to receive lump-sum payments and their regular pensions.
Capita administers some 250 pension schemes on behalf of both public sector and private sector employers. It was awarded the CSPS contract, which is worth £239m over seven years, in late 2023.
Committee members asked whether the firm had done its due diligence in relation to taking on the CSPS, and suggested the backlog should not have come as a surprise.
Clements said Capita had worked with previous provider MyCSP and the Cabinet Office, which has overall responsibility for the pension scheme, in order to understand the scheme and prepare for the transfer.
“We did stand up all of the processes required, all of the technology required to provide the service,” he said. “In terms of the open cases, we did receive data of the number and type and some analysis. But none of it was ever conclusive, nor did it show us the true entire picture.”
Holroyd told MPs that new providers taking up a contract such as the CSPS don’t get open access to the outgoing provider’s operations ahead of a handover.
“You can’t sit alongside, see the database, see everything. That’s not how the process works,” he said.
“This was a service transition, of which we do many, and there is a normal process. Part of that process is that the authority, or the department, that commissions the service can see into both sides. We went through that normal process.”
Capita had previously said it was expecting a backlog in the region of 37,000 cases but the figure on 1 December turned out to be more than double that, and the backlog has continued to increase in the intervening weeks. At yesterday’s session Holroyd and Clements said they had been particularly surprised to be presented with 16,000 unread emails from CSPS members on the day the firm took control of the scheme.
Public Accounts Committee chair Sir Geoffrey Clifton-Brown asked Holroyd and Clements whether Capita had effectively been lied to about the backlog, or whether the firm had failed to “ask the right questions”.
Clements said the firm had been asking for more and more details about the backlog during the transfer process, but had been “surprised at the exact nature” of it when the full picture became clear on go-live day.
Holroyd added: “We asked and were making clear that we were concerned about the level of the backlog because we could tell that it may not be as we were anticipating.
“It’s not for me to [comment on] the veracity of the answers. But what’s apparent to us, and became apparent at go-live, was that the information we were given was not the whole picture.”
Holroyd told MPs that Capita is in conversations with the Cabinet Office “right now” about the quality of the information it was given.
Last month the Cabinet Office announced the creation of a taskforce, led by HM Revenue and Customs second permanent secretary Angela MacDonald, charged with resolving the pension scheme backlog. Clements said that the move, which includes a surge team of 150 civil servants, was the right approach – but could have been implemented sooner if Capita had full knowledge of the backlog before 1 December last year.
MyCSP says all outstanding work items were “fully disclosed, discussed and reviewed with Cabinet Office senior management” ahead of the CSPS handover process.
According to the firm, 36,064 items were transferred to Capita as service-level related work-in-progress and a further 51,742 items were transferred as “work on hand”, which included tasks that could only be completed after the handover.
MyCSP says that the Cabinet Office had full visibility of those items before handover and that, to the best of its knowledge, so did Capita.
“We’re not getting paid”
MPs also grilled Clements and Holroyd about penalties faced by the firm because of service failings related to the CSPS backlog since December’s handover.
Holroyd explained that the firm’s failure to hit its service-level agreements in relation to the pension scheme’s operation meant payment is being withheld for its work on the contract.
“Clearly, we’re not delivering on SLA's so we’re not getting paid,” he said.
Clements said Capita’s contract included a “monthly SLA regime”. He said the regime meant that, in normal service, there would be a penalty every month if the firm is not delivering to a level specified in the agreements.