Civil Service Pension Scheme: Administration

John McDonnell Excerpts

Wednesday 4th February 2026 Westminster Hall

[John McDonnell (Hayes and Harlington) (Lab)]

I think that we are all going to be saying much the same thing. My hon. Friend the Member for Blackpool North and Fleetwood (Lorraine Beavers) set out a comprehensive understanding of the situation at the moment.

My latest contact has been from a Border Force guard who was planning his retirement but cannot get the information and has had to delay retirement. Others have not had their pensions paid. They are in a really serious plight. I chair the Public and Commercial Services Union parliamentary group. Let us be absolutely clear: this is a failed privatisation. It came in during the obsession of the last Government with privatisation during the early 2010s. At that time the union warned that there would be problems of this sort. We also warned that what will happen with these privatisations is that they get sold on—the companies get taken over and contracts are re-awarded. I found it shocking that Capita was awarded the contract in the first place, having lost the teachers union pension contract. I find it extraordinary that that was not properly taken into account.

People are aware that the general secretary of the union has written to the Cabinet Office about this on behalf of the union. So that hon. Members are aware what has happened, all that the union is asking for is clarity about the disclosure of the resources that Capita and others are now putting into resolving this problem. What level of staffing will be devoted to this problem? What is the timetable for resolving this problem? As many Members have said, there needs to be a direct instruction to Capita about dealing with the hardship cases—the bereavements and so on: the priorities that the members of the pension scheme have set out though their union.

The union has said it needs an assurance that if there is a prioritisation taking place, the completion of the voluntary exit schemes should be delayed. The prioritisation should be focused on getting the money out to those people who need it. Angela MacDonald has been announced as setting up the recovery scheme in the current crisis. My worry is that we might be here in two, three or four years’ time—whenever it is—because this privatisation has demonstrated that it cannot work. That is why so many members are asking the Government to please not exclude the possibility of bringing the scheme back into public administration. I do not want to be here again, pleading for people who have not had their pensions. On that point, I would like the Minister to say whether there is a clause within the existing contract that allows for its termination if it has failed, as it is failing at the moment. That could give us the opportunity for a fresh look at bringing it back in-house.

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[Mike Wood]

No. The hon. Gentleman is obviously trying to hide from the fact that his party was part of the Government that awarded that contract in 2012 to the mutual joint venture. He may wish to look at his own party’s part in that if he thinks that it was a mistake. Sadly, the information provided by the Minister for the Cabinet Office to the House last week fell well short of what is required. It failed to address the fundamental question of how the Government allowed Capita to take over the contract in December despite the repeated warnings and the signs that it had clearly failed in its key milestones.

[John McDonnell]

Will the hon. Member give way?

[Mike Wood]

I must continue, because I have only a short time; I have given way twice. We know that in November 2023, Capita was awarded the contract to administer the civil service pension scheme, but we also know that the previous administrator, MyCSP, had its contract extended until December 2025 specifically to allow for a two-year transition period that was meant to reduce risk, not create it. The National Audit Office investigation report published in June 2025 made it clear that MyCSP had failed to meet agreed service levels in the final year of its contract, with complaints more than doubling towards the end of that contract. That is a large part of the reason why the contract was awarded elsewhere.

If I may briefly refer to the tragic case of Philippa—not a constituent but someone who I had the pleasure of meeting because she was the long-term partner of a member of staff of one of our colleagues.

[John McDonnell]

Will the hon. Member give way? He should not be allowed to get away with this.

[Emma Lewell (in the Chair)]

Order. It is obvious that the Member does not want to give way.

[John McDonnell]

He is not giving way because he will not admit responsibility.

[Emma Lewell (in the Chair)]

Order. It is up to the Member if he wishes to give way; he has made it clear that he does not wish to.

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[Mike Wood]

As I have said, I did not see the details of the bid. Obviously, with any bid, it is right to look at previous performance. There will be some causes for concern with any of the bidders for large Government contracts because of the complexity of those contracts.

[John McDonnell]

Maybe the Ministers at the time did not see Capita’s Army recruitment fiasco, its primary care fiasco that put patients at risk, the near-collapse of the teachers’ pension scheme or the cyber-attack in which Capita exposed the data of 6.5 million people and was fined millions. Does the hon. Member not think that Ministers might have taken those into account before awarding this contract?

[Mike Wood]

I appreciate that the right hon. Gentleman has not always been an uncritical friend of the current Government, but he has to recognise that his party has been in government for more than a year and a half, during which there were opportunities to take action if they were unhappy with our contract.

As I said, the warning signs were there in black and white. Ministers were on notice of the potential for problems and their consequences. Despite that, on 7 July last year—a full year into this Government—the permanent secretary told the Public Accounts Committee that the Cabinet Office would decide in December whether Capita should take over administration. On 14 November 2025, the Cabinet Office wrote to trade unions confirming that Capita would indeed take over from 1 December, stating that it was satisfied—this Government, this permanent secretary and this Minister’s Department were satisfied—that Capita had taken on board the findings of those reports.

Serious questions have to be answered. What assurances were provided by Capita to Ministers before that final decision was taken at the end of last year? What scrutiny was applied to those assurances and by whom? Why, in his letter to colleagues, did the Minister for the Cabinet Office claim that these issues had only come to his attention “in recent weeks” when both the National Audit Office report in June and the Public Accounts Committee report in October warned of a “clear risk” that Capita would not be ready? The Public Accounts Committee was clear that Capita had missed seven out of its eight key transitional milestones to deliver its IT system and said:

“The Cabinet Office needs to fully develop contingency plans”.

If the Minister is right that he was only made aware of these problems in recent weeks, should the Government not have known far sooner and acted far sooner?

Although it is welcome that interest-free hardship loans are now available, this action has clearly come too late. Those loans should have been made available on an emergency basis from 1 December—the same day that Capita took over administration—so that people were not left in financial limbo. Instead, some pensioners have reported being forced to take out costly commercial loans or to borrow from friends and family simply to cover basic living costs. That is unacceptable. Can the Minister guarantee that no one affected will face further disruption beyond the end of this month? Can she guarantee that pension payments will be stabilised fully and permanently?

The warning signs were there for months, and the failure to act decisively after the publication of the National Audit Office and Public Accounts Committee reports is stark. Although it is deeply disappointing that the Government failed to prevent this from happening, we can all agree that it is now in everyone’s interest—