Capita to lose pensions administration service

Capita has run services for West Sussex County Council since 2012
Capita has run services for West Sussex County Council since 2012

Hampshire County Council is set to take over West Sussex County Council’s pensions administration service, which was outsourced in 2012.

Capita holds a ten-year contract to run IT and back-office services for West Sussex County Council.

Last year the council took back control of the county’s multi-agency safeguarding hub as delays were causing an ‘unacceptable risk to children in the system’.

Then, in February, a number of smaller functions run by Capita were brought back in-house, but council officers said the decision

was about improving flexibility not the company’s performance.

Now the pensions administration service is set to be taken off Capita and run by Hampshire County Council.

A joint statement from Capita and the county council said: “The proposed move is due to the county council’s changing requirements and priorities, which have evolved over time, as well as recent enhanced legislation of the local government pension scheme.

“It is also designed to ensure the service performs as best it can and to give the members of the pension fund best value for money.”

An officers’ report explains how Capita’s pensions administration service has ‘had difficulties in meeting their key performance indicators in recent years’, while a recent survey indicated that around 63 per cent of scheme members were less than satisfied with the time taken to answer queries.

However, officers also noted a number of ‘additional complexities’ had been added to the local government pension scheme since the contract was awarded.

Capita did put together a business case to improve its current service provided to the county council. Bringing it back in-house was explored but the current preferred option is to transfer the scheme to Hampshire County Council by March, next year.

According to officers: “The Hampshire proposal benefits from a consistent track record of meeting good service standards.

“The proposal has a focus on working with employers to promote good standards of record keeping and a ‘right first time’ approach, and this is an area it is felt the West Sussex Fund could benefit from.’’

Dan Sartin, branch secretary at UNISON West Sussex, said: “It was only at the last scrutiny meeting that some councillors were congratulating themselves on the great value achieved through the Capita contract when all the evidence points otherwise.

“The contract and its underperformance in key areas has been a drain on the public purse in West Sussex and stopped staff from getting on with their jobs.

“Here we see another key service requiring intervention, but the cost of all this is kept hidden from the public by using Part 2 papers. That lack of transparency can’t be proper.

“We are also concerned for the staff.

“Although the council are talking about TUPE transfers, that is meaningless if the work is going to be moved 50 miles away to Winchester or somewhere else.

“We’re seeking clarity but suspect that some staff are going to be made redundant, through no fault of their own.”

Mr Sartin added: “The move will bring to an end a shocking tale of outsourcing failure – but this latest twist in the Capita contract highlights just how difficult it now is for the council to take things back in-house.

“As the pension IT system is Capita’s own, it would cost a large amount of money to invest in a new system to take it in-house.

“This is going to be the case with a lot more than just the pension admin as time goes on, showing how the council is now over a barrel with limited options.”

The proposals were discussed by the council’s Performance and Finance Select Committee on Friday (May 18).

Jeremy Hunt, cabinet member for finance and resources, said: “I know many people will be ready to blame this change on Capita. It is in fact much more complicated than that.”

He outlined an ‘unanticipated’ rate of growth in the number of new members of the pension scheme and complexities introduced by changes to rules and regulations governing pensions.

But James Walsh, leader of the Lib Dem group, argued the paperwork and administration had been ‘woefully inadequate’ while performance was ‘quite staggering’.

He added: “A big organisation such as Capita should be fairly well equipped to deal with changes to legislation.”

He went on to suggest the report did not focus enough on the impact of changes on staff.

Mr Hunt said they had considered the impact on staff, and explained how taking the service back in-house had been explored but ruled out as it was not felt WSCC could deliver sufficient economies of scale.

Costs and financial details were discussed in the private part of the meeting.