The Cabinet Office is set to deploy a team of independent auditors to assess the ongoing crisis in the Civil Service Pension Scheme following administrator Capita’s failure to hit a key deadline for restoring service levels.
Paymaster general Nick Thomas-Symonds told MPs last night that the work, which is being billed as an “immediate technical intervention”, will look at Capita’s systems, data integrity and compliance with statutory duties on the backlog-plagued scheme.
The minister said the work is designed to “ensure full accountability” and that a “remedial adviser” is also being appointed at Capita’s expense. Their job will be to “force rectification directly on the ground”, according to the Cabinet Office.
The latest interventions follow Capita’s failure to meet its 30 June deadline to restore the CSPS service to contractual levels following its December takeover of the scheme. Thomas-Symonds stated that further interventions could not be ruled out and reiterated ministerial colleague Ruth Anderson’s suggestion last week that administration of the pension scheme could be brought back in-house.
“We need to build the unvarnished evidence base that will serve as a strict prerequisite for further formal escalation, including potential litigation or step-in remedies, should performance fail to improve,” he said. “In October, the House will receive a further update on the findings of the independent audit, the performance of the remedial adviser and the longer-term structural options being considered, including meeting our manifesto commitment by bringing the scheme in-house.”
Thousands of civil servants have faced delays to their regular pension payments or lump sums since Capita took over CSPS administration from MyCSP just over seven months ago. It inherited around 90,000 work-in-progress cases from the previous provider, but the backlog of cases grew to 120,000 within a matter of weeks.
MPs were told yesterday that following its failure to meet last month’s service-restoration deadline and an earlier target in April, Capita has set a new target for clearing a significant part of the backlog.
Thomas-Symonds told MPs: “Capita’s current working assumption is that the remaining backlog of over 6,700 quotations for past retirement dates and the 4,100 actionable bereavement cases will be systemically cleared through the rest of July and August. I hope this House will hold it to that timetable.”
The paymaster general told MPs that the Cabinet Office has so far withheld £9.9m from Capita for its failure to meet contract requirements. According to the Cabinet Office, that money relates to transition contract payments.
Thomas-Symonds also pledged that Capita would pay for the cost of the Pensions Taskforce and the surge team of civil servants set up in January after problems related to the scheme’s change of administration emerged.
“I have to be frank with the House: what progress has been achieved is due to the significant additional capability provided by the Cabinet Office pensions recovery taskforce, and a team of more than 140 officials whom I have ‘surged’ into the process,” he said. “Public money will not fund Capita’s failings. We will recover every single penny of these surge costs directly from Capita, and I will not remove a single member of the team until the service is permanently fixed and fully restored.”
Legal Aid Agency chief to join pensions team
Last week the Cabinet Office announced the appointment of Richard Vianello as director responsible for leading on the CSPS and Royal Mail pension scheme, taking on the baton from Angela MacDonald, who retires this month.
Yesterday, Cabinet Office permanent secretary Cat Little told staff that Legal Aid Agency chief executive Jane Harbottle is also being drafted in to “provide permanent operational command” as director general responsible for pensions.
She will work with Vianello and John Fitzpatrick, currently director of the Cabinet Office’s public inquiry response unit, to “co-lead day-to-day steady-state operations”, Little said.
The perm sec said the new “permanent team” would succeed MacDonald’s “emergency” taskforce.
Momentum grows for pension-scheme insourcing
Speaking in parliament yesterday, Thomas-Symonds made repeated references to the government’s 2024 general election manifesto commitment to deliver the “the biggest wave of insourcing of public services in a generation”.
He also referenced last month’s announcement of a new public interest test that will "end outsourcing by default" and require all contracts worth over £1m to be assessed for in-house viability before renewal.
Thomas-Symonds said if he could insource administration of the CSPS immediately, he would. However, he later noted that doing so would not necessarily be the best solution for scheme members waiting for delayed payments.
According to Little’s update to staff yesterday, ministers have instructed officials to bring together “a broad range of stakeholders and experts” to consider how CSPS members can best be served in the long term, including the option to insource. She said the move was “in line” with the insourcing strategy.
Shadow minister for the Cabinet Office Mike Wood said he was “agnostic” on whether the CSPS is provided in-house or externally. But he added: “There is little in the government’s record to suggest that they are capable of running this scheme any less incompetently than the current operators.”
Wood urged Thomas-Symonds to commit to using measures in the Procurement Act 2023 to start the formal process for investigating whether Capita can be banned from bidding for future government contracts, based on its recent track record.
'Time to sack Capita’, unions say
Steve Thomas, deputy general secretary of the Prospect union, said hard-working civil servants had been let down by the “shambolic” transfer of the CSPS to Capita.
“In the short term, Capita must urgently return this service to the required standard, and must be held to account if they are unable to do so,” he said. “But it is now obvious to all that civil service pensions are simply too important to be left in the hands of a company with such a dismal record of failure. It is time to sack Capita and take our members’ pensions back from this hopeless company.”
Fran Heathcote, general secretary of the PCS union, said yesterday’s statement did little to support scheme members “left almost penniless” because of the way the CSPS has been administered.
“Labour's commitment to the biggest wave of insourcing must become a quick reality, our members have waited too long for justice and delaying the inevitable until October will do little to ease their concerns,” she said. “Privatisation is a failed experiment; we need insourcing now.”
Adrian Prandle, assistant general secretary of the FDA union, praised ministers for a “serious response and decisive action” in relation to the update.
“It is right that the terms of contract are being used to address failings. We also welcome the longer-term feasibility study into how the service could be provided in the future,” he said. “However, this will not resolve the immediate issues and it is vital that none of this detracts from securing action for pensioners facing financial hardship and all other scheme members. Those who have served the public throughout their working lives deserve nothing less.”
In a business-focused response, Capita noted Thomas-Symonds' statement to parliament.
“We continue to work at pace to resolve the operational issues in collaboration with the Cabinet Office,” it said. “Despite the progress made to date, we recognise the service has not been good enough, particularly for members waiting on bereavement, retirement and quotation cases and we are sorry for the distress and inconvenience experienced by those members.”
It added: “We now have the processes, automation and technology in place to work through the backlog.”
The outsourcing giant is due to publish a comprehensive trading statement later this week.