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Barnet Council looks to bring parts of Capita contract back in house

Barnet Council is planning to bring parts of its Capita outsourcing deal back in house, and expects the supplier to pay the council £4.12m due to delivery issues with some areas of the contract

Barnet Council plans to bring finance and human resources (HR) services back in house, as its Capita outsourcing deal isn’t delivering as it should.

The council signed a 10-year contract, worth £32m a year, with the outsourcing giant in 2013, which saw IT and back-office functions such as HR and payroll transferred to Capita as part of the council’s One Barnet programme.  

However, a report by the council, due to be considered by the Urgency Committee later this week, said Barnet is not happy some of the service delivery.  

This includes the Mosaic adult social care system, a new IT system implementation “that experienced issues with timelines and quality of delivery”, according to the report.

Due to the “performance issues”, the council has negotiated a settlement with Capita, which will see the supplier pay Barnet £4.12m. The council is also stopping payments of procurement gainshare to Capita as part of the settlement. Last year, the council paid Capita £2m procurement gainshare payments, the report said.  

The report also recommends that HR and finance services, currently provided by Capita, are brought back in house by April 2019.

In July, the council’s policy and resource committee published a review of Barnet’s capita contracts, which recommended that the council review its partnership with the supplier.

Although the Capita outsourcing deal has “delivered significant benefits” to the council, they have not been fully successful.

The July review said there have been “various issues in respect of service performance across the two contracts”.

It added that “the environment in which local government is operating has also changed since the contracts were let”, and that the outsourcing market has changed.  

Barnet Council leader, Richard Cornelius, said while parts of the outsourcing deal has saved “millions of pounds a year, there are some services which have not been up to scratch”.

“What’s important is that we take action and taxpayers can be confident we are managing their resources effectively. Agreeing this settlement payment represents a good deal for the council,” he said.

“The return of finance and strategic HR services, and the wider review, will be debated by members at committee. Rest assured, a review of all the services is ongoing and we are making progress.”

Managing director of Capita Local Public Services, Jonathan Pew, said the supplier recognised that “some aspects of our service to Barnet Council have not met the standard we and our client expect”, and added that this “regrettably detracts” from the positive improvements Capita has made.  

“We are committed to getting this partnership right, so we can carry on delivering vital savings for council and for taxpayers. We will continue to work closely with the council to ensure our service best meets their needs,” he said.

Controversial deal

This is not the first time issues with the contract have been raised. An internal audit in 2016 found a series of failings by the supplier, including “no documented IT disaster recovery plans”, and issues with change management. 

The contract has attracted controversy from the very beginning. In 2012, before it was even signed, the council’s Labour councillors challenged the decision.

In early 2013, disability rights campaigner Maria Nash brought a case against Barnet Council, calling for a judicial review of the outsourcing programme, alleging the council did not properly consult citizens on the outsourcing plan. 

In April 2013, a High Court judge ruled that the objection came too late. Nash appealed, but a Court of Appeal ruled that the contract was lawful

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