PAC report showed early warning signs

The warning signs already existed in October, when a PAC report said there was a “real risk” that Capita will not be ready to take over the administration of the CSPS on time. The outsourcer hit back at the time, claiming it was “not reflective of the current state of the transition” and was inaccurate. But following failures, the business outsourcing service provider has had £9.9m in payments withheld from it due to missed targets.

During the hearing, executives apologised for its failure and pointed to a “huge backlog” of cases left for it by the previous pension administrator.

Richard Holroyd, CEO at Capita Public Services, said the supplier is now “fast-tracking any technology” that can help and is deploying “as much artificial intelligence [AI] as we can as fast as we can to help deal with the most important cases”. He said the company is already using AI to read emails and prioritise workload, and it will increase self-services for scheme members in the long run.

MPs told stories of constituents left with dire financial problems because of Capita’s failures delivering the scheme administration. PAC committee chair, Geoffrey Clifton-Brown MP, began by pointed to earlier warnings over Capita’s readiness and the suffering of people trying to claim their pensions.

“Last October, our committee published a report on Capita’s planned takeover from MyCSP of the administration of the civil service pension scheme,” he said. “This has been overseen by the Cabinet Office. In our report, the committee warned that there was a clear risk that Capita would not be ready to take over the administration as planned – and our predictions, sadly, have become a reality.”

Clifton-Brown said that MPs have heard “heartbreaking” stories from members of the scheme over the past few months, with many left with no income and having to resort to “hardship loans” from government departments.

Both Capita executives apologised profusely and blamed the backlog of cases left by the previous supplier for its failure.

Capita ‘overwhelmed’ by size of backlog

Holroyd admitted to MPs that the scheme was not delivering what it should, saying: “We inherited a scheme that was in need of reform, and we inherited a backlog of some 86,000 cases, 16,000 unread emails…”

Many of the cases in the backlog are related to emails that have not yet been read, said Holroyd, adding that Capita also inherited around 20 million lines of corrupted database data. “We inherited a service that was in distress,” he told MPs. “We are absolutely committed to solving it.”

Clements told MPs that additional human resources have been provided by the Cabinet Office, who are currently “reading those 16,000 emails” and promised that they will all have been read by February 28.

In total, there are around 750 people working on the scheme, compared to about 400 when it was taken over, according to Clements. When asked when Capita became aware of the unread emails, he said they were aware there were some but did not see them until the data was “bulk downloaded” to it on 1 December.

Holroyd said that once Capita became aware of the size of the backlog, it had to get more staff, train them and get them on the system, which takes time. While a backlog of a few hundred emails is expected, the true amount “overwhelmed” Capita, he stated, adding: “It is unheard of to receive that many unread emails on takeover.”

Asked whether Capita was told the scale of the backlog, Holroyd said the company would have prepared if it had been made aware of the vast number of emails, but it could not say how many emails it was told were there.

Promises made on 25 November to the government about delivery, just weeks before go-live, were “made in good faith” based on the information the company had, said Holroyd, adding: “What we believe was happening was that our predecessors were telling people to call back on 1 December when the new service began. We do not own the backlog, but we own the problem and it is for us to solve. It is the top priority across Capita group, and we are putting everything into this.”

Holroyd stated the company would not reduce staff until the service is running as it should.