The Parliamentary Secretary, Cabinet Office (Baroness Anderson of Stoke-on-Trent) (Lab)

My Lords, I listened with care to the points raised by the noble Baroness and the noble Lord, and I will have to revert in writing on some of the points raised by the noble Baroness, Lady Finn. First, I put on record my thanks to the fantastic public servants who have been failed and who we are seeking to support. The security and dignity of those who have dedicated their careers to our public services are not negotiable. They deserve a pension scheme that is reliable, efficient and secure. When the standards they deserve are not upheld, the Government will not hesitate to act decisively to protect their interests. The termination of the new Royal Mail Statutory Pension Scheme contract with Capita followed a failure to meet critical transition milestones and a total lack of confidence in its ability to implement the new operating model in a timely fashion. Capita had an 18-month planning window yet failed to deliver numerous milestones, including required IT automation. Of the 10 transitional milestones due to date, only four have been delivered and all those were late, which is why we have terminated the contract. Regarding the Civil Service Pension Scheme, the delivery of the service since the transfer on 1 December has fallen far short of the required standard. The transition from the previous provider, MyCSP, was not satisfactory, and investigations are ongoing into the respective liabilities for those failures to protect taxpayer interests. The stories of members falling into hardship are distressing and entirely unacceptable, which is why a specialist pensions recovery taskforce was established to take strategic oversight of the scheme’s management. To ensure no one faces financial anxiety alone, over £8.2 million in interest-free transitional support loans has already been issued to over 1,500 members most affected by these delays. There is confidence in the surge of about 140 officials into Capita and this intervention has made a significant difference. The government surge team was essential to bolster operational capacity, successfully clearing 15,000 inherited unread emails and initially bringing telephony wait times down to an average of under two minutes. While wait times have recently spiked to an average of 44 minutes, this was a direct result of a 120% surge in volumes driven by the end of the tax year and the annual benefits statement portal suspension following the data breach on 30 March. There is no intention to withdraw the team if that would result in a deterioration of service. That judgment will be made carefully against the June 2026 deadline for the restoration of proper service. On the NAO and Public Accounts Committee reports, the noble Baroness is absolutely right to highlight these reports regarding missed transition milestones, as was the noble Lord, Lord Pack. Significant milestone payments are currently being withheld where transition deliverables have not been met to drive performance, and every right is reserved to take further formal action. The Government have accepted the NAO’s recommendations, and after its report, we implemented a number of additional controls as part of this contract. Despite these challenges, transitioning to Capita to avoid a total collapse of the service was assessed as the lower-risk path, as MyCSP had become operationally and commercially unviable. Capita has been placed now under a firm mandate to clear all inherited arrears by the end of April and restore service levels to standard, contractually required levels by the end of June. Standardised mitigation letters are available on request via the pensions helpline to ensure that members can communicate effectively with mortgage providers and other creditors regarding service delays. Regarding the wider commercial position, there has been an offer from Capita to cover the costs of the surge team from 10 April, which will be considered in the broad accounting of all commercial issues in respect of this contract. There were several questions asked that relate to this. As I said previously, there was an independent assurance review undertaken last year. I am going to write to the noble Lord, Lord Pack, with the dates of all the meetings that were had, the promises that were made by Capita and to whom they were made and when—there was a range of promises made. We had the independent assurance review, and we were therefore as confident as we could be in moving forward. The noble Baroness, Lady Finn, raised the issue of MyCSP’s historical performance and the liability. The transition process from the previous provider, MyCSP, was not satisfactory and we are investigating respective liabilities for those failures between both parties. We have withheld all money due to MyCSP until transition failures are rectified and will pursue a parent company guarantee with Equiniti if necessary. Transitioning was necessary as MyCSP had become commercially unviable with backlogs increasing from 47,000 cases to over 60,000 cases by October. I have answered the question about mitigation measures. In terms of the commercial accountability and withheld payments, we have taken direct action on all commercial levers, including withholding significant milestone payments where deliverables have not been met. Capita is under a firm mandate to clear all inherited arrears by the end of April and restore full service standards by the end of June. We will consider Capita’s offer, as I have said. The noble Baroness, Lady Finn, raised an important point about why the review is in late summer. Our focus and priority have to be getting the system working, to make sure that people can access both their historic statements and their future statements, and that people can access the information they need as well as access finances that are theirs. I remind noble Lords that pensions are deferred salaries. These are entitlements: they have earned them, and we need to make sure that they can get the money. This is not about pushing review into the long grass—that is not where we are. We want to fix what is broken to make sure that the people who need access can get access, and then we will undertake a review, including a commercial review, with Capita to move forward. The noble Lord, Lord Pack, raised a really important point about Capita receiving an additional contract. The Synergy award by DWP in February followed a rigorous and transparent public procurement process conducted under existing public contract regulations. Each contract is managed on its own merits, and the Secretary of State for DWP sought and received specific personal assurances from Capita regarding delivery. However, I remind noble Lords that, while we are talking about two specific contracts in this Statement, both are the only Capita contracts with the Cabinet Office. Across the wider government and public sector portfolio, Capita has over 80 contracts, and performance remains high, with approximately 87% of KPIs currently rated as good. We have seen a clear failure of the Civil Service Pension Scheme and access to it. We desperately need to fix it and then look at what went wrong before moving forward with our commercial levers. But each contract needs to be assessed on its individual merits to make sure that it works and that the Government are compliant, as well as the people we work with.