Civil Service Pensions

Baroness Finn Excerpts

Monday 13th July 2026 Lords Chamber

Let me finish by saying this. Public servants who dedicated their working lives to this country deserve absolute financial security and unwavering dignity in retirement, not corporate failure, empty promises and severe administrative failure. I hope the House will see the uncompromising line in the sand that I am drawing today. I will continue to apply commercial pressure and ensure full accountability, and we will find a way forward that delivers for the people who deliver for this country. I commend this Statement to the House”.

[Baroness Finn (Con)]

My Lords, I apologise to the House and to the Minister for having to wear these glasses today. I am doing so on medical advice.

Before turning to the questions raised by the Statement, I want to express my deepest sympathy with the civil servants and families caught up in this failure. Many of those affected will have given more than four decades of their lives to public service. They have planned their retirement in good faith and, having left work, may now be entirely reliant on their Civil Service pension to meet ordinary household bills and maintain the standard of living for which they have worked and saved. They should not be forced to borrow, depend on relatives or postpone retirement because the state cannot administer the pension it promised them. The damage done to their finances, health and confidence is unprecedented and entirely unacceptable.

I thank the noble Baroness for giving the House the opportunity to question this important Statement. Our first concern must be the people affected, with more than 6,700 pension quotations still outstanding for past retirement dates and more than 4,100 bereavement cases on which Capita can take action. Behind every figure is a retired public servant, a grieving family or a household left in uncertainty. They must remain at the forefront of the Government’s response.

The Paymaster-General has emphasised that the Capita contract was signed in November 2023 under the previous Government. That is a relevant fact, but it cannot be the end of the matter. The Cabinet Office retained institutional responsibility throughout a two-year transition between Governments, and critical decisions on readiness, data migration, contingency planning and the go-live of the contract on 1 December 2025 were taken after repeated warning signs. The issue is not only who originally signed the contract but whether the Cabinet Office acted as a capable and sceptical contracting authority. On these Benches, our concern is not ideological and we remain agnostic about whether a service is delivered in-house or by a contractor. Either way, the Government must remain an intelligent and accountable customer.

The National Audit Office reported in June 2025 that Capita had already missed three of the six transition milestones that were then due, that the Cabinet Office had withheld £9.6 million of payments and that the service planned for launch had been simplified because important functionality would not be ready. It also found there were no fixed innovation or digitalisation milestones against which the promised benefits could be managed. In October, the Public Accounts Committee warned that there was a clear risk that Capita would not be ready to take over as planned and concluded that the Cabinet Office had not shown that it could effectively manage the outsourced administration of the scheme.

The evidence given to parliamentary committees since the collapse is more troubling still. Senior Cabinet Office officials have acknowledged that they relied heavily on assurances from Capita, that there are lessons to learn and that the department is still not fully confident in the quality of Capita’s management information. Independent technical auditors are now being brought in to test the data, systems and assumptions. That is welcome, but it raises the obvious question: why was that independent specialist verification not completed before the system was permitted to go live?

We welcome the withholding of £9.9 million from Capita and the intervention of the pensions recovery task force, but a recovery task force, however necessary, is a remedy for failed contract management. It is not a substitute for proper assurance before launch. Can the Minister therefore tell the House who authorised the go-live decision, what objective go or no-go criteria were applied, which criteria Capita had failed to meet and whether any requirements were waived? Will the Government publish the relevant readiness assessments, assurance reports and risk decisions, subject only to genuinely necessary commercial redactions?

Capita has now missed both its end-of-April and end-of-June recovery milestones. Scheme members should not be asked to rely on another unverified promise. What firm dates have now been set for clearing the overdue retirement quotations and actionable bereavement cases? Have those dates been independently stress-tested by people with the technical and operational expertise to verify that they are deliverable?

There are also wider questions about supplier management across government. Will Capita be referred to the Debarment Review Service or will it continue to be permitted to compete for public contracts without such a review? Why was Capita selected in February as the preferred bidder for the DWP-led Synergy shared services contract while serious concerns about the pension transition were already evident? What cross-government assessment of Capita’s delivery risk was undertaken before that decision was finalised?

Finally, I welcome the provision for interest where full pension benefits are paid more than one month late and the ability to seek redress for other losses through the complaints process. However, compensation delayed can compound the original harm. What service standards will apply to those complaints? How quickly will consequential losses be assessed and paid? How will the Cabinet Office ensure that Capita, not affected pensioners and not the taxpayer, ultimately bears the cost of this failure?

This is a corporate failure by Capita, but it is also a grave failure of public sector commissioning, assurance and contract oversight. Civil servants who have spent their working lives serving the country were entitled to expect the Cabinet Office to test promises, verify systems and manage risk before transferring a service on which their livelihoods depend. The Government must now resolve the individual cases urgently, compensate those who have suffered loss and demonstrate that the machinery of government has learned the fundamental lesson: outsourcing responsibility does not outsource accountability.

[Lord Pack (LD)]

My Lords, Capita’s failure to meet its end-of-June deadline following the previous end-of-April missed deadline is obviously extremely disappointing, but this is a story not just of corporate failure, missed KPIs or missed calendar dates but of so many individual cases of heartbreaking distress, especially for those whose loved ones died unexpectedly and who are now left in limbo, in uncertainty and, in many cases, facing financial hardship as well.

To be fair, the Government’s rhetoric on this has been fairly robust not only in reminding us of when the original contract was signed but also, for example, in the Minister saying in the Statement:

“I will continue to apply the most stringent commercial levers”.

I note that, in the discussions in the Select Committees’ joint meeting in the House of Commons last week, there was some discussion of the pros and cons, for example, of sacking Capita outright from this contract. But one of the other stringent commercial levers that could be applied, of course, would be to raise the question whether Capita should be placed on the debarment list, if its failures in this case so significantly undermine our confidence in its ability as a company to deliver on its promises that it would not be appropriate to award it any new future contracts. Such a step might help concentrate minds somewhat when it comes to resolving the current problem.

Of course, adding any company to the debarment list—and I think this would be the first company to be so added—is, I appreciate, not a step to be taken lightly, but the scale of repeated failure in this case is quite striking, as is the scale of repeated broken promises. Capita clearly made commitments on technology and then to meet remedial deadlines that it has not met. Those commitments were not just made off the cuff, casually, at a junior level; as the Cabinet Office’s Permanent Secretary set out in her evidence in the House of Commons last week, these were very serious commitments made at senior level that have not been delivered on. Given this record from Capita, can the Minister tell us: will the Government consider commencing the process to review adding Capita to the debarment list?

I turn to the existing contract and its problems. The Cabinet Office has said—and I think this is very welcome—that it is doubling its capacity to deal with pension complaints, which will increase following these many problems. Of course, the Pensions Ombudsman, a little bit further down the track, could expect a surge of complaints working its way through the system as well. Although there have been comments and commitments about how Capita is paying some of the costs of dealing with this mess, I do not think it has been made clear yet, and I hope the Minister can therefore clarify, whether Capita will pay for the extra costs that the Cabinet Office, and in due course the Pensions Ombudsman, will incur for dealing with the complaints arising from this mess.

Given the dependency on Capita for getting the McCloud remedy cases resolved, and indeed the extra pressure of legal deadlines in those cases, what extra steps are the Government now taking, given Capita’s failure to deliver on that end-of-June deadline and the obvious doubts that therefore arise about its ability to deliver what it has promised in other key areas? That question also applies to Capita’s recently won synergy contract.

Finally, to return to the main pensions fiasco, the Minister in the Commons said the Government are imminently expecting a new update and a new set of promises from Capita. Given that we will shortly go into recess, can the Minister also update us on what the Government’s intentions are to ensure that Parliament is fully updated on those new plans before recess commences?