Pressure mounting on Government to pause Synergy contract

The report from the influential public accounts committee (PAC) has increased pressure on the government to pause the “Synergy” contract. The contract to deliver HR and payroll functions to more than 250,000 civil servants in DWP, Home Office, Ministry of Justice and Defra was awarded to Capita, the company responsible for the current pensions fiasco. The decision to award the contract, worth over £700 million, was described by the PAC as “extraordinary”. The latest PAC report echoes PCS’s concerns and urges the government to urgently review the entire strategy.  

The government aims to cut costs by administering payroll and other HR services across multiple departments. Divided into five “clusters”, the Synergy cluster covers up to half the civil service. Unlike other clusters, the Synergy model outsources HR and payroll to the private-sector, in this case Capita.

A key finding in the PAC’s report is that major decisions including outsourcing of services are taken at cluster level rather than by the Cabinet Office. The PAC questioned whether this approach could determine the value of outsourcing. In other words, the Cabinet Office has not been able to demonstrate if outsourcing is a better model than the in-house delivery used within other Clusters. The report states that “neither Synergy nor the Cabinet Office were able to convince us of the merits of this decision”.

Other concerns expressed in the report include:

• Over-complicated governance
• No clear ownership
• Data delays
• Inconsistent departmental buy-in
• Poor management of inter-dependencies with other change programmes.

PCS gave evidence to the PAC, arguing that outsourcing HR and payroll to Capita within the Synergy contract was a huge operational risk in a “must not fail” service. The published report pointed to the poor performance of Capita on a range of government contracts, including MoD recruitment, supporting primary care services in NHS England as well as the disastrous handling of civil service pensions.

According to Sir Geoffrey Clifton-Brown MP, chair of the public accounts committee: “Capita’s involvement in the strategy, given their well-established poor record elsewhere, also does not give this committee confidence in its successful delivery”.  

Fran Heathcote, PCS General Secretary said: "The latest public accounts committee report on shared services, taken together with paymaster general Nick Thomas-Symonds’ highly critical statement condemning Capita over their handling of civil service pensions, reinforces the PCS demand for insourcing.

“Recommendations in the PAC report include a hard-hitting review to decide if the project should be “abandoned.” PCS members cannot understand why the government would risk continuing the pay and HR services contract with Capita, when they have already catastrophically failed to pay hard-earned pensions. I call on the government to abandon the Synergy contract with Capita now and provide the services in-house.”

Members are urged to join the campaign to end insourcing by completing our e-action.