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Botched IT deal leaves £23m hole in pensions budget


Pension shambles has come under criticism


The SNP government has been drawn into another costly IT scandal – after it emerged its pensions body is facing a £23 million hole in its budget after striking a botched contract.

The Scottish Public Pensions Agency failed to meet a single project milestone after signing the deal with outsourcing firm Capita to oversee the IT structure for its 500,000 members, Audit Scotland has found.

Capita’s bid was so “abnormally low” that doubt was cast “on whether the contract can be fully delivered” and the Scottish Government body was “required to investigate whether it was a valid bid”.  A rival bidder launched legal action.

Despite that, the SPPA – which deals with pensions for NHS staff, teachers and police – ploughed ahead with the arrangement, and only recovered £700,000 when it collapsed. That was after spending £6.3 million on the contract, and a further £2.4 million on existing IT suppliers.

Audit Scotland, whose report is released this morning, said the SPPA will now need £9.8m in revenue cash and £13.6m in capital money from the public purse in the next five years.

Scottish Tories say the fiasco follows similar IT controversies involving SNP ministers. A failed IT contract for farming payments starved Scotland’s rural economy of hundreds of millions of pounds three years ago, and continues to cause problems for countryside communities. 

And both NHS 24 and Police Scotland have endured IT crises costing the taxpayer millions of pounds in recent years.

Audit Scotland has now concluded that the SPPA “did not prepare a clear business case” for the new system, and set an “unrealistic” 18-month timetable for completion.

The group’s report also said the SPPA “did not adequately scrutinise the winning tender for the project” which had come in at an “abnormally low cost”.

Auditor General Caroline Gardner said: “The public sector is under pressure and we are seeing more instances of bodies embarking on IT projects without the necessary staff and assurance arrangements in place to manage them properly.

“In this instance, I found no evidence of a clear business case for a new integrated system, which was pursued at a time when the SPPA was going through significant change. The result was a project that failed to provide value for money and has considerably set back the SPPA’s planning.”

Scottish Conservative pensions spokesman Bill Bowman said: “This is yet another botched IT contract on the SNP’s watch, and it’s costing the taxpayer millions of pounds.

“The nationalists should have learned lessons from similar failings with farming payments, NHS 24 or even Police Scotland.

“But instead, we have another shambles which is draining the public purse when it can least afford it. This report poses some serious questions for the SNP government. 

“It has allowed this agency to get away with extreme negligence, and seems to have watched on while an agreement which was patently too good to be true was signed. 

“The hundreds of thousands of public sector workers whose pensions depend on this organisation deserve answers. Their pension payments must not be put at risk by this failing SNP government.”

Labour MSP James Kelly said : “This is an absolute mess which has cost taxpayers millions of pounds.

“Auditors found that the SNP’s cuts to public services has left them under pressure and under staffed, leading to botched projects like this. We now know Derek Mackay [Finance Secretary] is sitting on half a billion pounds of unspent money. It is about time he properly funded Scotland’s public services.”


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