One of the UK’s biggest local government outsourcing projects looks set to come to an end after the new leader of Barnet Council announced plans to terminate the authority’s contracts with Capita.
The commitment means the two deals with the company, worth a total of over £300m, are set to end within four years, when services will be fully outsourced or delivered in partnership with others. local authorities.
One of the contracts, the joint venture Regional Enterprise (RE) which covers planning, highways and five other services, will return to council control by next October. The other is the Customer Support Group (CSG) contract, which covers “back office” functions such as IT and customer services, and is expected to be fully in-house by April 2026.
Signed in 2013, the outsourcing deals were designed to save Barnet taxpayers £165million over ten years. But the contracts were later marred by controversy – including two frauds against the council, a breach of pensions law and IT failures – raising concerns about their value for money and a lack of scrutiny from the town hall.
A report presented to the Council’s Policy and Resources Committee on Tuesday found that bringing RE services in-house could save £204,000 a year after Capita failed to meet guaranteed income targets . Full insourcing of CSG services would cost the council over £2.6m a year which was not considered a “viable option” due to the need for “significant cost savings” in a short time.
Barnet’s previous Conservative administration had already agreed to internalize several other Capita services in addition to others that were previously integrated. But Tory councilors have refused to back the level of insourcing proposed by Labour, which took control of the council in May after pledging in its local election manifesto to “work to bring privatized services back in-house”.
Speaking at the committee meeting, Conservative leader Dan Thomas pointed out that some of the contracts for CSG services would be extended up to a month before the next local election and asked council leader Barry Rawlings if he would commit to having these services in place by April. q 2026.
Cllr Rawlings replied, “Yes. My intention at this time, but I’m willing to listen to other arguments, is that no services will be managed by Capita at the end of this administration.
The leader of the council added that some services currently run by the company could be shared with other local authorities rather than being placed under the full control of Barnet Council.
But Cllr Thomas said that in four years the financial challenges identified in the report would still exist and asked how they would be overcome.
Cllr Rawlings said the plans allowed over three years of ‘breathing time’ to come up with a business plan, adding: ‘It’s the prudent and sensible thing to do […] We can come to the condition where we can bring all of Capita out of Capita, into the public sector, and thus fulfill our manifesto promise.
Richard Cornelius, another Tory committee member who was leader of the council when the contracts started, said the Labor administration had made a “terrible mistake” in “committing publicly that there would be no of Capita contracts in place in three years”.
He added: “You are now negotiating with Capita for an interim contract, and I think the technical term is that you risk being taken for saying that. I think this is a terrible mistake, and I would suggest that if you want to drop the Capita contracts, go ahead and do it.
But Labor advisers defended the plans. Ross Houston said it was “very clear” that Labor planned to insource services in its manifesto, and that Capita would still have to meet the performance targets set out in the contracts. He added: “The idea that somehow we let the cat out of the bag is ridiculous because we are clearly bringing it home […] and [Capita] knows it very well.
Labor adviser Arjun Mittra said: “Caxit means Caxit. I am delighted that the council is no longer using Capita to provide services in the upcoming municipal elections. I think that’s beyond what was in our manifesto, but it’s definitely in keeping with the spirit of it.
All eight members of the Labor committee voted in favor of the insourcing proposals, with the four Tories voting against.
A Capita spokesperson said: “Capita is proud to extend its partnership with Barnet Council until 2026. We will provide better value for money to local ratepayers as we work with the council to continue to provide high-quality services that make the borough a better place to live, work and study for everyone.
“Over the past nine years, our teams have successfully delivered a range of key services to Barnet. This includes providing vital support to the council during the pandemic where we have worked with them to quickly adapt services to meet the challenges of Covid-19, processed over £113m in grants for local businesses and issued over £2million in test and trace payments to low-income residents. More recently, we supported the implementation of the council’s Homes for Ukraine programme.
“We look forward to working with the council to deliver services through the regional business until September 2023. Expanding into other services will allow us to build on our delivery track record and save £254,000 to the Barnet Council while avoiding an additional £2.6million. costs per year.