A failed IT project run by the Scottish Public Pensions Agency (SPPA) has left the body with a £23m funding gap for the over the next five years, according to the spending watchdog.

SPPA, which runs the retirement plans for over 500,000 people, spent £6.3m on the project in the attempt of making its processes more efficient, however Capita, its chosen supplier, failed to provide a working system.

According to Audit Scotland, SPPA provided “abnormally scrutiny” to Capita’s bid, setting an “unrealistic timetable for the project".

Auditor general for Scotland, 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."

As a result, ending the IT project meant it had to spend a further £2.4m on extending contracts with existing suppliers. The body runs the pension plans for NHS employees, teachers, firefighters and the police.

SPPA received a sum from Capita following the settlement of the dispute, but not enough to plug the funding gap over the next five years.

According to SPPA’s latest financial results, the group had a budget allocation of £20.4m over 2017/18, meaning the funding gap could amount to roughly 20 per cent of its budget over the next five years.

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