The Department for Work and Pensions (DWP) is insourcing 2,700 staff from an outsourcing supplier and will now complete Universal Credit Review (UCR) work in-house.
Staff will transfer to the civil service from business services firm Teleperformance, which has run the service since 2024.
The government said the insourcing decision is not related to the supplier’s performance: “The decision was taken to deliver targeted case reviews internally for the next phase, as we work to deliver £17.3bn of savings by March 2031, and was not due to supplier performance. Both parties continue to work closely during this phase of transition from supplier to DWP.
“This is part of wider plans targeting billions of pounds more in savings in the coming years by tackling fraud and error in the welfare system.”
Disputed rationale
The Public and Commercial Services (PCS) Union said it has disputed the department’s rationale that UCR work should be outsourced since it became aware of the plans in 2023: “We argued that it would not deliver value for taxpayers’ money, that it would not deliver the work efficiently, and that this core civil service work should not be delivered for profit by the private sector.”
The PCS added: “Throughout the duration of the contract, frustrated members working for DWP on UCR have told PCS that it wasn’t working, that handovers from the private sector were not in good shape and created extra work for DWP staff.”
The union said that Teleperformance benefitted from a £368m contract signed in 2024.
As the government has announced plans for the “greatest wave of insourcing” in a generation, suppliers cannot afford to slip up. One civil service source said: “The political climate is highly relevant. Any [supplier] slip ups will build a clamour for a bigger and more aggressive insourcing programme.”
In March, Cabinet Office parliamentary secretary at the time Chris Ward said “the age of outsourcing will end” and announced plans to insource services.
“For decades, successive governments have been, at best, ambivalent about whether public services are delivered in-house,” he said. “At worst, we’ve had outsourcing by default, with public services hollowed out and sold off to the lowest bidder. That era ends today.”
Insourcing snowball
In April, the government terminated Capita’s Royal Mail pension scheme contract, citing failures to hit milestones.
The British Medical Association (BMA) recently called for the GP pension scheme to be brought in-house, claiming the current supplier Capita lacks the “ability” and “capacity” to run it.
The government is also in the process of planning a long-term strategy of bringing the Civil Service Pension Scheme (CSPS) in-house. The service administered by Capita has been a disaster since the supplier took over in December, with retired civil servants waiting months – nearly a year in some cases – for their pensions.
Disaster after disaster has prompted the government to make the decision, with a Cabinet Office spokesperson telling Computer Weekly that the government is “actively shaping a long-term strategy to bring this pension scheme back in-house”.
Sally Jameson MP, parliamentary secretary in the Cabinet Office, said in a recent Westminster Hall debate: “We stood on a manifesto as a Labour government to have the biggest wave of insourcing in a generation. I am personally committed to that. I’ve said in this house before that I think that’s a priority for this [CSPS] scheme, but we can only do it when we make sure that it’s in the interest of the members. We’ve got to make sure that there is no disruption. We’ve got to do it in the smoothest and quickest way.”
In the same debate, Ian Byrne, MP for Liverpool West Derby, described the botched CSPS scheme as “the failure of outsourcing laid bare”.
The PCS union added: “The decision to insource [the DWP] work demonstrates again the failure of the private sector to deliver key public sector services.”
