Outsourcing giant Capita has told MPs that lessons from the Civil Service Pension Scheme backlog crisis will be applied to the firm’s role on the Department for Work and Pensions’ huge Synergy contract.
Earlier this month the firm was selected to deliver back-office services for DWP, the Ministry of Justice, the Home Office and the Department for Environment, Food and Rural Affairs as part of the 10-year Synergy deal.
Valuations of the contract vary. Capita has stated it is worth £370m over 10 years, with the rider that this “excludes additional change and expansion services expected over the term of the contract”. An award notice on the government’s Contracts Finder website gives a figure of £606.6m for the first seven years of the contract alone.
As part of the contract, Capita will deliver HR, payroll, recruitment, finance, procurement, and service desk-support for the departments, which are part of the Synergy cluster.
Capita’s selection prompted concerns from PCS – the civil service’s biggest union – in light of the backlog crisis that emerged after the firm took over administration of the CSPS in December.
These problems have seen thousands of CSPS members left waiting for regular pension payments and lump sums. Capita says it inherited a work-in-progress backlog of 89,000 cases from previous provider MyCSP when it took over administration of the scheme.
At a session of parliament’s Public Accounts Committee yesterday, Richard Holroyd, chief executive officer of Capita Public Services, was asked whether lessons were being learned from the pension-scheme experience for the DWP contract.
Holroyd said he had already met with DWP permanent secretary Sir Peter Schofield and the team responsible for Synergy, and looked at learnings that can be taken from the current problems.
“We have worked through all the lessons learned that have come from this contract mobilisation and transition and we have an active plan to ensure there isn't a repetition of those sorts of activities,” he said. “Particularly pieces around ensuring data quality, detailed pieces of work, understanding what the backlog may be.”
Holroyd said the casework backlog Capita was likely to encounter in relation to Synergy would be “very, very different” to the work-in-progress backlog the firm received from MyCSP. The outsourcer has consistently maintained that the backlog of cases it was handed by MyCSP was significantly in excess of what had been expected.
The firm’s work on the Synergy contract is due to start this month, but it does not go properly live for another 18 months, Holroyd said.
“It's a very different style of contract, very different style of services and we have pulled together a charter that we're going to work together to sign to ensure that all parties – because all these things are always a joint effort – to make sure that we're working in lockstep,” he said.
Holroyd suggested the charter would be signed by DWP, the MoJ, the Home Office, Defra and Capita. He said a joint session between the parties is due to take place on Wednesday next week “to work through this and understand the priorities as we go”.
Holroyd insisted that although there are “lessons to learn” from the MyCSP transfer, the company has a good record with government contracts.
“We run many hundreds of government contracts and we are measured by the Cabinet Office on 57 contracts where our KPIs are running at 95%,” he said. “We're in good shape.”
Holroyd also told MPs that, unlike the CSPS administration, Capita is not contracted to deliver the “base technology” elements of Synergy.
Terminally ill CSPS member ‘still waiting for payments’
At yesterday’s session, Holroyd and Chris Clements – managing director of Capita Pension Solutions – updated MPs on the state of the firm’s CSPS work-in-progress caseload.
Clements said that there were currently 140,000 open cases, of which some 40,000 were straightforward tasks, such as changes of address for scheme members. He said that around 15,000 of the cases are “part-worked on” and then the rest are lower-priority.
Clements said that of the 89,000 cases Capita inherited from MyCSP in December, the firm had focused on ensuring that everyone who had been given a lump-sum quote got those payments. He said the firm had so-far paid out 7,782 lump sums. Of those scheme members receiving lump sums, 165 had been waiting for more than a year as of 1 December, he said.
PAC member Clive Betts raised the case of a terminally ill CSPS member who is still waiting for regular pension payments.
“James Fenny is a solicitor up in Darlington,” Betts said. “Tragically, in October he was given an end-of-life prognosis. Obviously, he hadn’t got that long to live and he wanted his pension for the remaining part of his life. He didn’t get any money until you took over, but then he finally got some payments for his pension, going back to November and December on 10 February.”
Betts said that Capita had not made payments for January and February.
“He’s struggling. He hasn’t got the money. He’s having to borrow off family and friends,” Betts said. “He keeps phoning up, and all he gets told is the case will be escalated.”
Clements said he was “very sorry for everyone who’s waiting”, but added that it was difficult to immediately comment on a specific case. He said Capita would write to the committee in relation to the case.
“In April, we will make sure that all of those pensioners who are in a situation like you have described are in receipt of their normal recurring payment,” he said.
Boss ‘considered resigning’
At the end of the session, PAC member Rachel Gilmour asked Holroyd – whose CV includes a 23-year stint in the Army – whether he had considered “falling on your sword” over the CSPS problems.
“Yes, is the honest answer,” Holroyd replied. But he said that would be the “easy way out”.
“What my commitment is, after a career of delivering for the citizens of the UK, is to work hard to make sure we get this service back in the right place,” he said. “I’m sure you’d agree that’s the right thing to do, rather than – frankly – turning to the left and leaving it to others.”
Gilmour said she would “find it very difficult to have a conscience that has been so traumatised as yours”.
Holroyd said he was traumatised by what had happened with the pension scheme, as were Capita’s top team.
“We are, and I speak for the PLC board too, we are traumatised by the service that the members of the pension scheme are receiving,” he said.