MPs reprimand Capita amid civil service pensions storm
Capita has apologised for a raft of failures connected to its civil service pensions contract with the UK government. The company has also warned of a multi-million hit to its earnings as a result of the scandal, while members of parliament have accused Capita of treating government contracts as a “cash cow”.
“I would love to have the opportunity to deeply, first and foremost, apologise,” Adolfo Hernandez, chief executive of Capita, said. “I would like to apologise for all the members who have been receiving a very poor service at a very difficult and challenging time in their lives.”
The apology, during a grilling from MPs in a commons committee hearing, came two days after Capita first apologised for a raft of contract failures linked to its handling of civil service pensions. The failures led to delays in administering the 1.7 million-member pension scheme, leaving thousands of civil servants awaiting payments and retirement quotes.
Hernandez reiterated that the firm will “not stop” until its failures have been fixed after facing fierce criticism from MPs. He added that the pension-holders were “citizens that have worked for the country for many years in a variety of very critical positions” – and that “for everything we are responsible for, they have my biggest apologies.”
Capita recently failed to meet a deadline at the end of June, to deliver the terms of the £239 million pensions contract after missing earlier targets. Confirming the extent of the crisis, the Cabinet Office has said that more than 6,700 quotations for past retirement dates and 4,100 bereavement cases remain outstanding.
In spite of the apologies, then, members of the Public Accounts Committee were less than forgiving with their line of inquiry. MPs questioned whether the firm views the Government as a “cash cow to be milked to the point of dropping from exhaustion”, while ministers have since noted the possibility of bringing the operation of Capita’s contract back into government management.
Financial hit
Capita’s civil service pension contract is one of at least 80 government contracts the outsourcing giant currently holds. The threat of alienating itself from such a key client subsequently led shares in the company to fall 18% in one day – to hit their lowest point in a year, and compounding earlier losses as the full extent of the issues became clear.
More pain may be down the line too. Capita has also warned of a potential £40 million hit to its earnings for 2026, stemming from the widespread contract failures on the UK’s civil service pension scheme. Reports suggest the company anticipates underlying operating profits will be knocked by between £25 million and £40 million this year.
Meanwhile, the government has moved to parachute in a 140-strong team of civil servants to help clear the backlog of work. Following that news, Cabinet Office Minister and Paymaster General Nick Thomas-Symonds pledged to recover “every single penny” from Capita.
