NEST admin contract to be ‘re-examined’ - UPDATED

The computer contract for administering the National Employment Savings Trust – signed by the Labour government just months before they left office – will be re-examined, David Laws says.

The chief secretary to the treasury said he had written to all secretaries of state asking them to re-examine all spending approvals since January 1 this year and all pilot schemes.

Laws said, where projects were good value for money and consistent with the government's priorities, they would go ahead but, where they were not, "it would be irresponsible to waste money on them".

He said there was "no point" in continuing pilot schemes where they were too costly to implement.

Laws explained: "The Chancellor and I are united in our resolve to deal urgently and decisively with the unacceptable state of our public finances. It is both possible and necessary to start taking action this year.

"By making an early downpayment we are not only helping to reduce the deficit faster, we're sending a clear and strong message that we intend to do what's needed to repair our public finances and get our economy moving again."

This comes after it was revealed the computer contract for administering the National Employment Savings Trust will cost £600m.

It is understood the contract will cost at least £25m even if it is cancelled.

Tata Consultancy Services was appointed as the administer for the National Employment Savings Trust in March (PP Online, March 2).

The contract with TCS is divided into two stages and runs for 10 years, with possible extensions for up to a further five years. The first stage will run to October 2010, allowing TCS to begin the activity required to set up and administer NEST.

Prior to the expiry of the first stage, a decision will be made on whether to proceed with the contract for the remainder of the contract term.

TCS became the only bidder left in the race after Great-West Retirement Services (Europe); Logica UK; and Danish pension fund and administration provider ATP Group withdrew from the competitive dialogue process at the end of last year - leading to questions over whether the contract would be good value.

At the time of GWRS's withdrawal Liberal Democrat pensions spokesman Steve Webb said the TCS "had the government over a barrel" and questioned whether the contract would provide value for money.

This comes after the coalition government announced it would hold an emergency budget on June 22 to detail how it would reduce the budget deficit by £6bn.