Public Accounts Committee and Public Administration and Constitutional Affairs Committee

Wednesday 8th July 2026

(began 3 months ago)

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12:49
None Portrait Speaker 1
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Order, order!Welcome to this joint session of the Public Accounts Committee and the Public Administration and Constitutional Affairs Committee. On Wednesday, the 8th of July 2026. I'd like to thank my fellow chair, Simon Hoare, for his committee's collaboration with us on this important matter of the ongoing failures of the Civil Service Pension Scheme. So before we start, I want to make clear that both committees sitting here agree with the Minister that the levels of service and experiences for members of the pension scheme over the past seven months, since the transition of provider to capita have been entirely unacceptable.

We also recognise that the current office is responsible for the ongoing issues with the scheme, many of which predate the transition to this provider. Will no doubt be aware, this is a very distressing matter for many individuals. And we know that from our Postbag. All members of Parliament know that. I know from my fellow committee members of the PAC and Pacac regularly hear from retired scheme members who have been left struggling to make ends meet at a pivotal point in their life, causing them.

Significant distress and anxiety and anxiety. I'd like sincerely to thank every individual who has taken the time to write the committees to the committees on this issue, and indeed, all of the staff who have had a really heavy workload in the last few days. It's much appreciated. Everybody who's helped with this hearing. So this afternoon, we want to hear what responsibility the government has for this mess, how the minister and Cabinet Office officials are holding accountable for its service failures, how it is supporting affected individuals.

And finally, what consideration is given to insourcing this vital service. And finally, what consideration is giving to insourcing this vital service. So I think what I'm going to do is my normal practice and ask everybody, Minister, to introduce themselves. And that would be really helpful if we could start with you, please. Nick.
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None Portrait Speaker 2
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So Nick Thomas.
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None Portrait Speaker 1
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And Andrew.
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None Portrait Speaker 2
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The answer, the straight answer to that question, Sir Geoffrey Chair, is no. But I wonder if I could just give a brief opening statement. And then, of course, we will move to questions. Look, the simple truth of this and I made that clear to the House in my statement on Monday, is the position we find ourselves in is not good enough. It's completely unacceptable. And I am deeply sympathetic to the many members of this scheme who have dedicated their careers to public service and have been treated frankly so poorly by this provider.

So I'm afraid. Yes, capita has failed to meet its end of June milestone to return the scheme to required levels, and the figures I'm just about to give, Sir Geoffrey, are correct. As of the 30th of June, but I will pass, if I may, to Angela in a moment, just to give more context and detail to that. But we're talking of over 6700 quotations have still not been dispatched for past retirement dates, and over 4100 100 bereavement cases remain unresolved in the system. And frankly, these are grieving families, public servants who are facing serious illnesses, dealing with harrowing and difficult situations as it is without having to deal with the delivery failure on top.

I also wanted to say, Sir Geoffrey, that under my leadership, and I'm sure you'll appreciate I've had this responsibility since September. The reshuffle last year, the government's been doing everything possible to manage the crisis and fix the issues on behalf of the scheme members. The moment we were alerted to these severe delivery challenges in January, I intervened immediately to establish the Cabinet Office Pensions Recovery Task Force and I brought in Angela, who is the second permanent secretary of HMRC to lead that. I also deployed urgently a 140 strong government surge support team directly into capita to provide vital operational capacity and obviously, the priority then was to stabilise the service.

I also established on an emergency basis a transitional support loan scheme, and that has delivered around £15.6 million in interest free funds to over 2700 members experiencing payment delay. I've also ordered the team to take direct operational control of correspondence workflows to establish virtual surgeries running every weekday, and we've delivered, I think, over 250 surgeries to support over 150 members of Parliament and caseworkers since launching at the end of May. Now, because of those interventions, in my view, and the work that Angela, the team cat and the team and indeed Andrew have done, we have seen an acceleration in the speed of issuance.

I think we've stabilised the phone lines to achieve a much better average wait time. That isn't to say that bad experiences are still not being reported, but certainly the average wait time has gone from over an hour and a half to around about three minutes. But whilst I do think the emergency intervention has stabilised the service, and I dread to think, by the way, where we'd be without it, we cannot carry on like this. Propping up a failed private contractor, and I will not have a situation where public money is funding corporate failings.

So I will be fighting relentlessly for members to ensure we recover every single penny of the cost of these surge interventions from capita. So over the next few months, our immediate focus is on executing robust commercial and operational pressure to clear the remaining backlogs and recover the service. But for the longer term, I do think the episode has vividly exposed the severe limitations of outsourcing the Civil service pension scheme. We are executing our contractual rights at the moment to deploy independent technical auditors and an on the ground remedial adviser to pinpoint residual issues, and I am actively with my team, exploring all commercial, legal and operational options, including testing, which I know we'll come to in a moment.

The long term feasibility of a full in-house delivery delivery model. I'll leave it there, sir Geoffrey, I know your members will want to discuss these issues, but I wonder if I may just ask Angela, just to give some context to the updated picture before we move on.
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None Portrait Speaker 5
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Thank you. So now I'm aware. I don't want to give you a massive blizzard of figures because I'm I'm able to answer so many of your data questions. So if at this point I stick to some fairly high level numbers and then no doubt colleagues will be able to ask me specifics as we go through, would that be an acceptable way to to go in?Okay. So if we look at it sort of from the macro level, so how much work is in the whole system?Is there is progress being made and what progress is being made against the inherited work?So we're in a situation at the moment where there was about 9000 pieces of inherited work.

And if you'll remember, colleagues, that is the 86,000. And then do you remember the 15000 unopened emails that we discussed when we've been before you before?Well, out of that, about 4000 pieces of work were sat inside there. So that's where 90,000 outstanding pieces of work comes from. Since then, since the 1st of December, just short of about just over 287,000 new pieces of work have arrived. The scheme is active. There's plenty of new work coming in, and that means that overall, 377,000 has gone into the machine in the round.

Now a lot has been processed. But as we sit here right now, there is 111,000 pieces of work to do. SAT inside the scheme. Now no scheme is ever zero, so a normal head of work in a scheme like this would be about 55000. So to give you a bit of a sense of where we are, we should be at 55000 by now in a in a normal running and we are at 111,700 at the 30th of June. I'm hoping chair, that I haven't lost you so far.

Is that okay?
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None Portrait Speaker 1
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No, I'm.
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None Portrait Speaker 5
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With you. All right. Yep. So again, just to give you some sense of sort of where we find ourselves, we're at double where we should be at this situation. Now in terms of the really particulars. So thinking about quotations which are incredibly important here. So the minister referenced 6700 at the 30th of June. About 1000 more have been issued since then. So we're at 5700 and we expect about another 2000 or so to go this week.

But that would still leave about 4000 members with past retirement dates. So the numbers were quoting here are for retirement dates pre the 30th of June, not for retirements which are coming up because obviously we've got more to do there. So there are still as I sit here now, 5700 members without a quote for a past retirement date. When we look at payments outstanding, there are 3127 payments outstanding. And 1800 of those people have been sat waiting for their payment for more than 30 days.

So those get you to the sense of, I've sent my paperwork back. I don't know, I'm not getting my things through. So that's where we are on payments again, as we're flowing through. And then when we look at Bereavements, which is another key area, um, there are. 16,876 in the Bereavements queue now. 9273 of those have got no money due. So that could be the death of a second spouse or there is no dependent. So just over half of that there's no further money due.

However, 7603 are families where further benefits are due. Um and of the people in that process, nearly 2000 of those people have been sat in that queue for more than four months. So again, progress has been made in all of these. But there are there remain significant volumes of families sat uh, um, as yet unprocessed. Um, and then, um, if I, I'm should you want me to stop so far?Do you want me to keep going.
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None Portrait Speaker 1
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Yes.
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None Portrait Speaker 5
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To, I will. So, um, so the portal. The portal currently has a track. My case facility. Um, there are two. It's at the moment, it's a fairly basic functionality. It basically recognises that there is a case there. Um, so because when we remember perhaps for earlier hearings, there was lots of concerns that requests were going into a black hole. Nobody knew that there was even a request that had been there.

So it basically, it very clearly says where you're at. It is though still quite basically either says there's an open case for you or a closed case for you. It doesn't really tell you what all of the detail, the details are. There is a further update to go onto that portal. Um, and um, we are trying to make sure that other resources, which, you know, there is lots of things where people have questions. Well, capita have updated their with the website to look at the most frequently asked questions, that kind of thing.

So we're trying to offer a balance of people going online who, where that is their preference or ringing. But it is really important whether portal doesn't deliver for you. That is why, as the minister mentioned about phone service, why it's so important that the phone service remains fit for purpose. Because if you're not able to get what you need on the portal, what you can't be doing is waiting two hours on the phone, hoping that somebody's going to answer your question so it isn't good enough yet, chair, but it is part of a multi delivery.
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None Portrait Speaker 1
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And Joe, may I just ask Mr. MacDonald, just a final question on this section. Um, Mr. MacDonald, you're very usefully gave the joint committee a series of very helpful figures and statistics behind each of those very large numbers. Will, we all know, ly an individual who has worked hard or who is going through the upset of bereavement, who is going through the most terrible time trying to get hold of something which is legitimately theirs?Um, I think of my one constituent who's been to see me, who had to, who had to retell the story of her early bereavement six times, only to be told by one person, are you sure?Because you sound too young to be a widow.

Oh, um, not, I would suggest, acceptable from any organisation. Still, there's something the size of capita. So my question really is the human one and it's one I actually asked the minister on his useful statement in the House earlier this week. Are you persuaded or convinced that capita understand the sensitive human nature of the issues that they have at hand?This is not data. This is not percentages. This is not numbers. This is not checklist.

These are people who are racking up debts, who are worried they can they can or cannot pay their bills because their pension is not coming through, that they are not necessarily certain they can commit to funding a funeral. In some instances where they're uncertain about the bereavement stuff. Does capita get, and I'm sure it's a question I will ask capita when they before us later on this afternoon. Does capita get the human impact?Of their inaction and service failure?And is that in any way expediting their response, or is it just data, data, dry data?
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None Portrait Speaker 5
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So I speak to Chris Clements, who is the the lead for the capita pensions virtually every day, every other day. And the only thing he and I talk about is the situation about the members. We don't talk about commercials. We don't talk about money. We don't talk about priorities in terms of we can't spend on this and we can't spend on that. The only thing we talk about is families. We talk about complaints that we're both seeing.

We talk about particular cases that we're trying to fix. When I sit on the front line and I think the awful experience that you have narrated there, you shared when we were before you, before we were before you, before, um, and I've been to the front line, uh, to sit with some incredibly hard working frontline colleagues in capita who are taking these phone calls every day, who are working their very hardest to be able to deliver. I think the core at a macro level is, as permanent Secretary mentioned, the technology is not yet where it needs to be.

And so there is a challenge between we can there's no point just being empathetic and sympathetic. We actually need to be able to do something for these people. Um, and when you are not able to be in a situation where your technology means you can navigate your way out, then, you know, you can be left with lots of sympathy and empathy, but not actually being able to tackle the cases. And what those very those members want. They don't want sympathy and empathy.

They want somebody to fix their case and get them sorted. So, um, I absolutely know that the from the very bottom to the very top, they understand, but they understand is only important when they understand turns into. And now we fixed it and now we're doing stuff, which is the things that I flagged to you before.
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None Portrait Speaker 1
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But I wasn't.
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None Portrait Speaker 5
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It is.
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None Portrait Speaker 2
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Um.
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None Portrait Speaker 6
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Right. AM I sorry?
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None Portrait Speaker 7
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Rachel.
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None Portrait Speaker 8
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Thank you, thank.
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None Portrait Speaker 5
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You, thank you.
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None Portrait Speaker 7
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To you.
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None Portrait Speaker 2
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Well, I think I think again, very fair question. First of all, we've already withheld £9.9 million worth of milestone payments from capita. That's the first point. Secondly, they've obviously defaulted, uh, in recent weeks at the end of June. And we're taking appropriate action, of course, under this contract, there's, as you would expect, stages of escalation. There's step in, etc., that you can go to. There are and my instructions to the team which they've been carrying out to the letter in recent months, is if there are further financial penalties can be levied, they will continue to be.

There is then, I think, a wider question here about this scheme, because for me at the moment, there are two things. There's. First of all, the immediate duty we have to. The 1.7 million members of this scheme in terms of stabilizing this immediate crisis. And obviously that has to be dealt with. That's what's in the interest of the scheme members that I think are always at the forefront of my mind. There's then a second question about the future of this scheme, this scheme becoming durable, and I do observe I've only been the the minister since last September.

But I do observe in the past a variety of iterations have been tried on this scheme to um to, to get it to be effective. What I've said to the team is I want the team to come back to me with options as to how we can put this onto a stable footing. And as I said to the House as well, on Monday, the government has now introduced the public interest test, which is that you don't have outsourcing by default. Now, from April next year, the government will be looking at contracts worth over, I think, a value of £1 million as to when they come to an end, what might be the best way to take those contracts forward?So I think, Rachel, in answer to your question, I think the first point is we will continue, and my very firm instructions are to continue to use the commercial levers that we have under this contract.

But I do think there is a second question here that has to be answered. How are we going to make this stable and durable for the long term?Stable and durable for the long term.
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None Portrait Speaker 2
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Let me just come to that, because it's something we have been discussing. This. Yes. So so I think I think first of all, we you know, in terms of support and redress, as I say, first of all, there is the question of restoring the scheme. There's then the issue of redress, which I think falls into a number of categories. We've already agreed in terms of interest, that this is automatically due when full benefits are settled, more than a month after the member retires.

So where you've got that gap, which is obviously no fault of the scheme member, there's interest. There's also then the issue of financial loss, where members can evidence a delay that cause financial loss. There's also the issue of distress and inconvenience. But so to be clear, interest there's there's an existing statutory complaints process that exists that can evaluate claims for financial losses. So that's done on a case by case basis. That is the situation at the moment. As I say, there's then that provision on interest to which I've just referred to.

There are complaints and where complaints have been raised. There's again, an established process. First passing through capita, Cabinet Office and ultimately to the Pensions Ombudsman. So my answer to your to your question is, I think there are three types of redress that members may be entitled to, and I think it's very important to set those out. And there's an existing process that will obviously look at that on a case by case basis. And I, as I'm sure the committee can imagine, will be very concerned to see how this is operating in the next days, weeks and months.
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None Portrait Speaker 5
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So if I, if I, if I might let me explain what we're going to do because you're absolutely right. What we can't have is people have then got to spend several years battling to get all the way through to the Ombudsman and then go through that process. And I regularly speak with both the regulator and the Ombudsman. And so we are doubling the size of the capacity in the Cabinet Office to make sure that the Cabinet Office step can go much, much faster and can cope with an increased volume.

But also we've been we're working with the Ombudsman to look at in. Obviously, these cases are typically case by case, but there are themes of these cases. So rather than wait that the only point that somebody could get a level of redress is to go all the way through the Ombudsman. If we know that the Ombudsman would make a certain award for a case like that, then let's make that award right at the very beginning, not wait for the member to have to go all the way through all of those many steps.

So our aim is to be able to redress for all the awful experiences that people have had as far early in the process as we possibly can, with as few cases as we can manage having to wait to get all the way. As far as the Ombudsman and the Ombudsman is, is working very hard with us to make sure that we are living within the kind of judgments he would make, the kind of levels of redress he would have, have the power to instruct us to make, so that actually everything is happening early and not late.
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None Portrait Speaker 9
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Thank you.
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None Portrait Speaker 2
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So I'll pass on, on to in terms of the precise numbers, Catherine, but let me just look, I did I did very carefully consider the National Audit Office report from 2025. But let me just just pick up what you've said, because I think it's fair to to set this out. So I felt obviously, when I got to November, December of last year that I had very limited options in this space, there was already in place the contract with capita from November 2023, which obviously predates Cat and I in the Cabinet Office that was in place.

They'd obviously been. Then the the two year transition, it was just wasn't viable to continue with with my CSP. I mean, there was no legal basis to do so, let alone anything else. But even if you moved beyond that, there was such significant problems in that scheme. There was no union recognition, there was ongoing industrial disputes. And indeed, I think that point about staff coming over was something that was raised by, I think, the Public Accounts Committee, uh, itself around about that time, it was more expensive to stay with my CSP, even if it were possible.

There was also the issue that they weren't even willing to commit to proper KPIs. They were talking about using best endeavours. So there was no to continued on. That was just not a viable option. The idea that, you know, I could in-source something in December in those circumstances with no state architecture to do it. And this pre-existing contract, I think is just just for the birds, frankly. I mean, we're talking about a 1.7 million member scheme.

I mean, that just wasn't in any sense a realistic proposition. So what I was left with was, was the transition, um, to capita and the way that I certainly that contract gave stronger commercial levers, there's no doubt about that than the, uh, situation with my CSP, which obviously I've been instructing the team to use it at every opportunity, but what I was also looking at then were, were contingencies. Okay. But I was looking at what are we going to do here if things if things don't work out now first, first of all, uh, I went to capita.

First of all, I'm quite old fashioned. I like to speak directly to people to actually try to get a sense of what they were talking about. And, and, you know, and I feel personally very let down about this. I mean, I met the chief executive. I know you'll be meeting the chief executive. I think, uh, after this meeting. And I was obviously talking about their preparedness for this contract. What the contingencies were, and I was being told then by the chief executive.
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None Portrait Speaker 11
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When was this?
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None Portrait Speaker 2
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This is the 25th of November last year. So this is before the go live date on the 1st of December, that the UK government would be presiding over the largest AI enabled pension in the UK. And I would therefore have, and I quote, a flagship use case is the assurance I was being given by capita ahead of this. And I'm sure as the. As the Committee can imagine, we were obviously aware there was a backlog. We were obviously aware, as were capita, that there were significant problems.

Uh, with my CSP, but I was very specific and questioning of the, of the chief executive throughout that meeting. But I also was reassuring myself that if things did go wrong, government does have surge resources. That was the other point that we always do have that. And as soon as it became clear and we're talking about early January. So it wasn't very long afterwards that we were going to have to ramp up. That's exactly what I did. So that that's the situation, if you like.

I know, I know, I believe that we've done all we can over recent months. I believe the officials for the very robust I think they'll all agree very robust instructions I've been giving. They've all been been carrying out that out to the letter, but I am certainly not coming before you with some sort of counsel of perfection here. We should not be in this situation. There's no question about that. And that's why as well, we have to collectively learn the lessons of this, not just the last 6 or 7 months, but also let's not forget the trouble my CSP had already significantly got into as well.

And what is the best way to to run this going forward?And I think that's what I'll certainly be turning my mind to. But as I say, my immediate priority is stabilizing this service and the very people Catherine, you were talking about and your constituents. And when, you know, I think you asked me the question in the chamber as well about the person, obviously, who very sadly passed away, we need to be dealing, as Angela is, with that as a matter of urgency. But we've also then got to get it right going forward as well.
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None Portrait Speaker 1
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Thank you. Chair. The nub of the conundrum. Um, Minister, surely is this that there isn't the um. Competitive marketplace of bidders in this and indeed in many other sectors where government has outsourced, it's been concentrated into sometimes monopoly bidders. Um, at worst and sometimes just 1 or 2. So the issue you're surely between all of you wrestling with is this. If the outcomes deteriorate inexorably, that moves you towards taking a decision to terminate the contract.

And there is nobody else outside to whom you could award it. So it would have to be in sourced in those circumstances, it's going to take you. What about I think you said in the chamber about two years. I think something of that nature to to get up and running. Have said, right, well, we've lost this. There's no incentive. The situation would have got worse to, to have taken to the decision of we just have to terminate the contract because the threshold has been met.

And what is today a bad situation?Then suddenly looks ten times worse. So isn't the the issue here, the stark issue is that, in essence, a company like capita. Has the private parts of HMG very firmly in their grip and how. So what is the strategy to remind capita that the government is their number one client, if it wishes to continue to secure business from the government, it needs to up its game. But if they're facing into a. There is an inevitability because psychologically, we've gone past the tipping point of contract retention, a bad situation will just get worse, and the people who will suffer will be all of our constituents.
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None Portrait Speaker 11
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Yeah.
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None Portrait Speaker 3
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If I might add just two things. I mean, one, my direct conversations with the chairman of the board and with the chief executive have been entirely focused around the fact that we are their number one customer, and we expect to be treated as such. And that is an important framing for the whole of this negotiation and getting this contract back on track. Thing one, I think the second thing I'd say you're absolutely right to point to the state of the market for these large pension schemes.

When we tendered for this contract, there were only two suppliers left at the time at which the contract was awarded back in 2023, and government and the public sector is now one of the last standing parts of the economy that offer defined benefit pension schemes. So we are a very, very large customer for complex schemes with a market that has a very small number of suppliers, and that therefore is the market challenge that we are we are facing. And in normal circumstances, you might say, well, why wouldn't you shape the market?You're such a big customer.

Surely you can stimulate interest and competition in providing more of these services, because these are high risk, complex, difficult to administer services where, where, where really struggling to see where a competitive market can be, can be delivered. So in a very classic kind of make or buy decision making process, we are having to go right back to the basics of the different models. And it's not as simple as insourcing or outsourcing. There are many different models for how you deal with this sort of market situation.
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None Portrait Speaker 11
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Thank you.
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None Portrait Speaker 2
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The 2 to 2 things just to pick up on the surge team. Look, I will always take operational advice on that. If it is a proposition is put to me that I need to do something additional, then I will most certainly open to that. I have regular dialogue with Angela, regular updates. And by the way, chair, I do echo what you've said about the work that her team has done. It's been Herculean, frankly, in the circumstance of recent months.

Can I can I just make a second point, though, because on the escalation mechanisms, whether it's individuals raising cases or indeed members of Parliament raising cases, this is something I've found particularly, frankly, offensive from capita in terms of particularly. And again, we've had to, in effect, take over not just MP surgeries, because, frankly, chair, there was one capita tried to run. I had such negative feedback from members of Parliament. We basically had to take that over. Um, you know, I ran a drop in personally with Angela back in April.

I know that officials are running now weekly virtual surgeries, and they have been doing for MPs and casework since the 29th of May, but also be in no doubt of the emphasis I have placed directly to Capita's chief executive. Now, on more than one occasion, about dealing with members of Parliament who are speaking on behalf of their constituents. And indeed, my colleague in the Cabinet Office. Minister Kerr, has actually been in contact with the speaker of the House of Commons about this. So seriously.

We take their failure to respond to MP correspondence in a timely manner.
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None Portrait Speaker 5
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Yeah, I think the key thing to remember is that this is a really complex pension scheme. It's not a thing where you just throw another 50 people at it. And following week, something magical will happen. Um, these are, uh, the. This, this scheme, the inherited colleagues who. Beg your pardon, the inherited people who have who have moved over from my CSP. See, I, I can't help myself. I can't help myself. Um, that, you know, many of those people have got many years of deep defined benefit pensions expertise and therefore, where the civil service surge people are doing, they are being we are being massively careful to deploy them only to places where their level of skill and expertise means that they can do the good, they can do a good job.

So that means there is only so much of the scheme where we can make a real difference, because what you really need is deep pensions expertise. So we are aiming to do all the jobs where a capita colleague could be anybody leaving the capita people to be able to do drive down the and focus on the really deep pension stuff. But it is the conversation about could you have more people. What could we do as a conversation that I have regularly with capita. But I have to say, I think cat's point is absolutely the important one.

We will not. People our way out of this. The technology delivery is the only way for a scheme of this scale and this complexity. It is only through the delivery of the technology will this scheme get to the point of good, high quality delivery.
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None Portrait Speaker 12
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Thank you.
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None Portrait Speaker 3
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I think there's some there are lots of lessons learned about both the capability and the capacity of contract management. And some of these we've talked about previously in earlier sessions, we completely changed the basis of the contract based on lessons learned from the my contract. So the levers, the commercial tools, the the milestones, the KPIs, the way in which the contract was managed under my CSP was a lot weaker than what we have under this contract, which is why from day one and in fact, minus six months from day one, we've been able to withhold money.

So before they were even allowed to transition to deliver this service, we withheld funds. We were able to leverage our commercial position in the way in which the service was delivered. We have boosted both the capability and the capacity of the Cabinet Office team. I think one of the reflections I humbly have is that we assumed that we would be able to manage this contract with a similar level of capacity and leadership that we had under the my CSP contract. Very, very quickly that became clear that wasn't acceptable.

And that's why Andrew, as our government chief commercial officer, has personally invested a significant amount of time. It's why we've invested in a much bigger contract management team with different capability and different expertise to ensure that we are holding them to account every single day. And you might want to say a little bit more about the strengthening of capability and capacity.
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None Portrait Speaker 9
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And. Do you you've talked a lot about the complexity of a defined benefit scheme and how there aren't many suppliers out there who can do that. This is a very unusual, defined benefit scheme because it's not funded, and it's surely the funding, the how you do the investments, how you manage them, how you do the actuarial assessments of whether you've got sufficient investment to deliver the benefit. That's the complicated bit. Actually, this scheme is not particularly complicated. You've talked about how capita are hitting their targets on the payroll side of it.

The payroll side of it is payroll. There's lots of people who do payroll. You don't need to be a defined benefit pension specialist to do payroll in order to work out the calculations. Again, it's they're fairly straightforward. It's how long has the person worked?When did they start working?Have they had maternity leave?Did they go part time?They're questions that you have to find the answers to, but they're not complicated. They're not specialist.

They're fairly basic HR questions. You could set up some pretty good spreadsheets quite quickly that would have protection on them. So you couldn't over edit the formulae and things to calculate this. To be frank with you, I've had to do it myself on a much smaller scale, but it's not difficult to do. You. And I wonder if you've got yourself over concerned that there's only this one supplier, when actually there's plenty of competent people who could deliver those services.
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None Portrait Speaker 10
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You.
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None Portrait Speaker 2
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Yeah. So the first point is the I did I did look very carefully at the, um, the National Audit Office report, though I have to, I have to say, and I was looking through it in preparation for coming before you today. And with the exception, ironically, of implementing the McCloud judgment, uh, the National Audit Office was saying that since August 2017, my CSP has met expected performance as it had met performance. Measures same way it had been below expected measures, but actually was was not saying don't transition to capital.

What it was actually talking about was, you know various lessons to be learned. So I certainly did look at that. I actually looked at what the public Accounts Committee, um, had had said. And as I indicated my answer a moment or two ago, I felt that of this attempting on no legal basis to continue with a failing scheme versus the go live on the 1st of December. I don't regret doing that, because I think that was the best thing I could do in the circumstances.

Now, the question, Clive, you're putting to me around, uh, planning. Well, the government, the government was elected anyway on a, a wave of insourcing is what we were elected on. There has been parallel work going on, on that that's been done by the parliamentary secretary, the Cabinet Office, Minister Ward, who has been driving forward the work that's got us to the public interest test. If you then challenged me to say, well, of course I was in January thinking already about how am I going to get through this in the medium term, my absolute priority then was stabilizing the service.

That's what I through the, uh, put the resource into. And that's what I've been doing. So the work going forward, look strategically at all government contracts was going on. Uh, last autumn. Uh, and I think both the decision, the go live decision in the circumstance I was in, but also I don't think anyone can say I haven't intervened very quickly, very sharply. And also, by the way, looking at all eventualities I've also been given been very clear with officials and Cat and Andrew can comment on this as to using every possible lever we've got under the contract as well.

So I would suggest I've been doing those two things in parallel.
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None Portrait Speaker 13
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And that's just.
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How is that defined?
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Sorry.
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How?Who defines that?
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I don't think I'm.
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None Portrait Speaker 10
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And I thank all of you very much today. It's not an easy subject. This I wish it were better, but it isn't. But what we're really all about is to try and get the scheme back on track, so that those pension members who are entitled to their money from the scheme are able to get it without too much fuss and in a reasonable level of time. So, Minister, can I thank you very much. Thank all of your team.

Uh. We will, uh, the transcript for this session will be up and running in the next few days. Thereafter, we'll consider with the joint committees what further action we wish to take. But again, thank you very much. Order, order!Back to this joint session of the Public Accounts Committee and the Public Administration and Constitutional Affairs Committee. On Wednesday, the 8th of July 2026. Um, as some people who are in the room will know, earlier we had heard evidence from the Cabinet Office on why performance has been so unacceptably poor since capita have taken over the contract and their perspective of what remains to be done to restore service to acceptable levels.

Despite our strong views on capital's performance with its contract, we are grateful that you're appearing today. It has not been difficult to secure your appearance and you are facing up to your responsibilities by giving evidence, so thank you for that. That having been said, as you would expect, our scrutiny will be robust and challenging, but I hope. Fair, good temper and moderation are hallmarks of parliamentary debate, which we will uphold this afternoon. We're not here to castigate you, but we want to understand exactly what has gone wrong.

So today we will be seeking answers from you as to why you have failed to restore service levels. By the end of June, which has already been extended from the end of March. And what more capita can do to ensure that all eligible scheme members and their spouses can fully access their pensions to which they have been made a contract for many years, a contribution for many years. So a warm welcome to all of you. I'm going to let you introduce yourself.

Adolfo, would you like to introduce yourself, please?
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None Portrait Speaker 10
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And, Chris chair, I.
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None Portrait Speaker 1
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So let's just try and pull that a little bit apart. Um uh. Inability to run to customer satisfaction, Helpline. An inability to deliver a reliable, transparent, accessible portal. Need to have HMRC provided search teams of around 150 people. Bereaved. Awaiting payment. People were awaiting settlement figures and as the numbers progress on the backlog. Of course, new people are joining. So you're running to stand still. Promises made to government to Cabinet Office during the contracting process that.

The two year transition period would lead to the digital AI revolution. To deliver a world class, world. Leading. Service. None of that met. Neither the novel nor the basic. IV to your evidence, which you gave to the PAC. I chair the PACAC, but I understand that you gave that committee and had given ministers of the Crown a cast iron guarantee and assurance that the end of June date would be met. So, notwithstanding the additional search, not with.

A notwithstanding, notwithstanding the fact that one would hope that through the chain of internal capita managerial reporting, an alarm bell was ringing. None. Of the key service delivery has been met to a standard which our constituents. Deem to be acceptable. This Joint Committee believes, is tolerable, and that His Majesty's Government believes, either meets the contract or delivers value for money. So in basic terms, what in the name of all that is holy went wrong?Because this is systemic failure.

Not a one off. This is systemic failure. Are you just resignedly. Coasting now to the moment when the frustration level of government is reached and the contract is taken from you. In short, you are just running down the clock and the people who are caught in the crosshairs of that strategic decision is, as always, the poor bloody infantry, i.e. those who require their pensions, who are dealing with bereavement. And across the piece.
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None Portrait Speaker 9
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If I if I may. Um, sure. We we took over the payroll of, as the minister said, and we have not missed a single payroll. Um, so we, we continue to make the payments. So we've paid out £4.8 billion of payments to, to more than 700,000 members. Um, we have ensured that through that transition that we understood all the rules and all the things that feed into that, what you can see from both the anecdotal examples and the management information, that there are cases that have waited a very long time.

And when we first took over the call centre, we received a lot of phone calls from people who said, I've been waiting for you to take over to now fix my old case. Um, we you mentioned the call centre. We stood up a call centre to take 7000 calls a day. We were receiving 25,000 calls. We are now receiving 9000. We've stood up a second call centre. We've massively increased the amount of training and we are now.

We are now answering the calls within eight minutes. And over 50% of those calls. Over 50% of those calls are are one and done. So they are completed on the call where the person gets the action that they want. Since we took over, as Angela pointed out at the start, we've done over a quarter of a million pieces of work. Um, and we continue to work through all that old data, continue to work through the missing, um, member records.

We continue to work through all of that. What to be clear to the committee, um, we also have had technology problems as, as the, the minister and Angela pointed out, we, we have had those technology problems and they have meant that it has taken us longer to resolve the things so that both things are true. We inherited data that we have had problems understanding. The scheme rules are exceptionally complicated. It really is a very complicated scheme, and we have not been able to deploy the technology that would allow us to get there.

What you have seen.
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None Portrait Speaker 9
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Um, yes. So we.
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Thank you.
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Some people.
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None Portrait Speaker 11
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Two hours.
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No, no, I.
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Um.
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May I clarify?
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Yes, of course.
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Okay. Sam, please.
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You will consider.
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I can only apologise.
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None Portrait Speaker 18
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I would agree.
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I'm sorry for that.
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You know, I.
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Yes, Catherine.
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You will.
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Be hearing from us.
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Yeah.
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Yes.
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Good.
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None Portrait Speaker 1
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Percentage breakdown.
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Yes.
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I apologize.
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None Portrait Speaker 9
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Right. Mr. Holroyd?Mr. Clements, you've met with officials in the Cabinet Office regularly, haven't you?So why couldn't these assurances about the search team and who was going to pay for it have been dealt with in those meetings?Um I think um the second permanent secretary and the leader of the task force had said this in the previous session. Um, what we've been focused on with her agreement is absolutely focusing on return of service. Um, there are commercial conversations to go.

The government chief commercial officer explained what's happening in terms of payment with being withheld. We understand that. We understand that. And I think, um, he said this too, that the full bill for what we will be, we will be required to pay, will be defined once we get back into service level agreements. So it hasn't been the case in all my conversations with the government chief Commercial Officer. Um, Chris has been working very closely with the leader of the task force.

So we understand, um, because we understand the contract well, exactly the sort of penalties that are coming, the service credit penalties, etcetera, etcetera. But we haven't taken time at this stage to, to total it all up. And I think that the second permanent secretary gave you those numbers of what we and we agree with those estimations of what the government has spent to date. So it isn't a case that we're avoiding it. It's not a case of, um, trying to adjust it, um, or of a negotiation or we are required to deliver a rectification plan.

Um, and I think that was mentioned in the previous session that we have a meeting in the diary to on the 15th of July, 16th of July to meet with our opposite numbers. We will go through that process there. The discussion of an auditor, um, in order to. And that will be at our cost to appoint the auditor. Um we'll do that in partnership with um the head of the task force again. So please, please accept my assurance.

We're not avoiding it, dodging it. It's just that they will produce the bill. And when we produce the bill, we'll sit down and go through it. And because we understand the contract, we know the nature of what's coming, right?So what we're also very interested in what's coming in terms of actually, um, service delivery. So when are you actually going to get all the service you provide up to the contractual arrangements you entered into?So if I, if I pick that up, um, there are, there are what we have committed to is that by the, um, 30th, 1st of September, we will take, we'll take all those that are in current retirement process.

So the people, as I think, um, the head of the task force said, have just recently retiring because the machine now works. So the engine is now working. We could take those people through and we will deliver those by no later than the 1st of September. Um, so that means those people we can get through the engine because it works. Um what we, the complex cases, the more complex cases are those that we referred to earlier in, um, we actually refer to it with the task force as the stock.

So those people who are sitting in waiting for payment, and some of them have been sitting for some time, um, the commitment there is, we all get those, um, paid and cleared by the 1st of September. This goes to our point that we've built the machine. The machine is now able to operate. Um, there are some highly complex cases that we inherited and, and um if I may, you, you've raised some of those with us before. Uh, some of those cases are, there are about 600, which we largely inherited.

Um, in some cases, those service records are not complete. So to um. Uh. Charlotte Cain's point earlier, we have to sit with, um, the HMRC and the Department of Work and Pensions to recreate that service record because in some cases that Department of State doesn't exist anymore. And because the um the member of the scheme retired left the scheme some years ago. So there are a number of those that are highly complex.
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None Portrait Speaker 9
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It's roughly 600.
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None Portrait Speaker 20
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So apart from those.
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None Portrait Speaker 20
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It doesn't happen.
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Sorry.
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Keep apologising.
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Okay.
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None Portrait Speaker 14
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Thank you chair. Um, you talked at the beginning about how you were surprised by the complexity of the scheme and, and the size of the scheme. I have to say that surprised me because I believe capita managed the scheme until 2012. Um, and you had a two year transition period as well when you had a good chance to look at it all and understand it. We've heard about the fundamental problems, the fundamental backlogs. But another frustration that a lot of my constituents have is that when they do get through to someone, they are given a deadline for when they will hear again from capita, when their case will be resolved.

That deadline, I'm afraid, is routinely missed and not even an apology and a sorry, the new deadline will be X. That person then has to recontact capita. Eventually that person, that constituent, gets so frustrated that they contact me as their MP, and then I contact capita on their behalf and I get the same game. I get told that, um, it will all be resolved by a deadline. Um, and then when I go back to the constituent after that deadline to say, is it all resolved?No it isn't.

And then I have to go back to capita, most recently, a constituent waiting for data so they can finalize probate from last year. Uh, they, I was told that they would get all the paperwork by the 7th of July. As of this morning, they hadn't had it. Um, so I would like to understand how you justify. I hear all the problems that you inherited and what have you. But how do you justify treating people like that?Why don't you give them a proper deadline for when you can sort it out and then meet that deadline?It is so stressful for them.

And then the other thing, as I raised with the Cabinet Office, you will have heard at the end of this, I know a few days seems hardly anything in the great scheme of all the months. These poor people are waiting. But at the end of this you pay them by Bacs. So there's a delay of several days. Why don't you have the decency to at least pay them by chaps so they get the money straight away?
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