Government names Capita preferred bidder for £700m civil service payroll contract
Capita, which is currently failing to pay pensions to thousands of retired civil servants has been named the preferred bidder for a £700 million contract to run payroll services for more than 250,000 civil servants across some of the government’s largest departments.
The Department for Work and Pensions (DWP), acting as the lead department for the programme, has selected the outsourcing company as preferred provider for payroll covering staff in the DWP, Home Office, Ministry of Justice and the Department for Environment, Food & Rural Affairs.
PCS has branded the decision a “reckless gamble” with civil servants’ livelihoods, warning that any disruption to pay would have immediate consequences for staff, many of whom already face below-inflation wages and are struggling to get by.
The proposed deal sits within the government’s “Synergy” shared services cluster, part of a wider strategy to replace 286 legacy systems with five major platforms through a single cloud-based Oracle Enterprise Resource Planning (ERP) system covering HR, payroll, finance and procurement.
Capita already has a track record of serious failures. Handing the company responsibility for paying a quarter of a million civil servants risks importing that chaos directly into monthly pay packets.
The pensions crisis is not an isolated incident. Capita’s handling of Army recruitment fell so far short that, in 2024, the Defence Committee confirmed plans to replace the contractor after it achieved just 63% of its recruitment target — the worst performance in five years.
Last year, the Information Commissioner’s Office fined Capita £14 million following a data breach linked to a 2023 cyber incident that exposed the personal information of millions.
PCS General Secretary Fran Heathcote said:
“Capita is already at the centre of a pensions crisis that has left retired civil servants in distress. Privatisation is failing, so why does the government continue to reward those responsible with yet another massive public contract?
"Ministers can see these crises unfolding in real time, yet they are prepared to place the pay of 250,000 serving staff at risk.
PCS is calling on the government to urgently reconsider. Our members cannot afford missed or delayed pay because mortgages, rent and bills don’t wait. The government must guarantee that staff will not pay the price for contractor failure, which would have serious and immediate consequences for thousands of working families.”
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Notes to Editors