Capita Commits to Applying Civil Service Pension Scheme Lessons to Major DWP Contract

Outsourcing contractor Capita has assured Members of Parliament that insights gained from the Civil Service Pension Scheme backlog crisis will inform the company’s approach to its substantial role in the Department for Work and Pensions’ Synergy contract.

The firm was selected earlier this month to provide back-office services for DWP, the Ministry of Justice, the Home Office and the Department for Environment, Food and Rural Affairs under the terms of the decade-long Synergy agreement.

Contract valuations differ considerably. Capita has stated the deal is worth £370 million over ten years, whilst noting this figure excludes additional change and expansion services anticipated throughout the contract period. An award notice published on the government’s Contracts Finder website indicates a figure of £606.6 million for the initial seven years alone.

Under the contract terms, Capita will deliver human resources, payroll, recruitment, finance, procurement and service desk support for the departments comprising the Synergy cluster.

The selection of Capita prompted concerns from PCS, the civil service’s largest union, given the backlog crisis that emerged following the firm’s assumption of Civil Service Pension Scheme administration responsibilities in December. These difficulties have resulted in thousands of CSPS members experiencing delays in receiving regular pension payments and lump sum distributions. Capita maintains it inherited a work-in-progress backlog of 89,000 cases from previous provider MyCSP upon taking over scheme administration.

During a session of Parliament’s Public Accounts Committee, Richard Holroyd, chief executive officer of Capita Public Services, addressed questions regarding whether lessons from the pension scheme experience would be applied to the DWP contract.

Holroyd confirmed he had already met with DWP permanent secretary Sir Peter Schofield and the team responsible for Synergy to examine learnings from the current difficulties.

He stated the company had worked through all lessons learned from the contract mobilisation and transition, developing an active plan to prevent repetition of such issues. Particular focus would be placed on ensuring data quality and conducting detailed work to understand potential backlogs, he added.

Holroyd noted that any casework backlog Capita might encounter in relation to Synergy would be substantially different to the work-in-progress backlog received from MyCSP. The outsourcer has consistently maintained that the case backlog handed over by MyCSP significantly exceeded expectations.

Work on the Synergy contract is scheduled to commence this month, although the service will not become fully operational for another eighteen months, Holroyd informed the committee.

He described the arrangement as a different style of contract with different services, noting that Capita would establish a charter to be signed jointly by all parties to ensure coordinated working. The charter is expected to be signed by DWP, the Ministry of Justice, the Home Office, Defra and Capita. A joint session between the parties was scheduled for the following Wednesday to review priorities and establish alignment.

Whilst acknowledging lessons to be learned from the MyCSP transfer, Holroyd emphasised the company’s strong record on government contracts. He noted that Capita operates hundreds of government contracts and is measured by the Cabinet Office on 57 contracts where key performance indicators are running at 95 per cent.

Holroyd also clarified that, unlike the CSPS administration arrangement, Capita is not contracted to deliver the base technology elements of Synergy.

During the session, Holroyd and Chris Clements, managing director of Capita Pension Solutions, provided MPs with an update on the firm’s CSPS work-in-progress caseload. Clements reported that approximately 140,000 cases remained open, of which some 40,000 were straightforward administrative tasks such as address changes for scheme members. Around 15,000 cases were partially worked on, with the remainder classified as lower priority.

Clements stated that of the 89,000 cases inherited from MyCSP in December, the firm had prioritised ensuring all individuals who had been provided with lump sum quotes received those payments. To date, the firm had paid out 7,782 lump sums. Of those members receiving lump sums, 165 had been waiting for more than a year as of 1 December, he confirmed.

PAC member Clive Betts raised the case of a terminally ill CSPS member still awaiting regular pension payments. The individual, a solicitor in Darlington who received an end-of-life prognosis in October, had not received any payments until Capita assumed control. Whilst some arrears for November and December were paid on 10 February, payments for January and February remained outstanding, leaving the individual financially dependent on family and friends.

Clements expressed regret for all those experiencing delays but noted the difficulty of commenting immediately on specific cases. He committed to providing the committee with a written response regarding the case and confirmed that all pensioners in similar situations would receive normal recurring payments by April.

At the conclusion of the session, PAC member Rachel Gilmour asked Holroyd, whose career includes a 23-year tenure in the Army, whether he had considered resigning over the CSPS problems. Holroyd acknowledged he had considered the option but described it as the easy way out. His commitment, following a career dedicated to serving UK citizens, was to work diligently to restore the service to appropriate standards.

When Gilmour suggested she would find it difficult to carry such a traumatised conscience, Holroyd confirmed he and Capita’s senior team were indeed troubled by what had transpired with the pension scheme. He stated that both the executive team and the PLC board were deeply concerned by the level of service that pension scheme members were receiving.