Council says extra £217m paid to Capita was ‘not an overpayment’
By Simon Allin, Local Democracy Reporter

Capita's head office in central London — Capita’s head office in central London

Figures showing Barnet Council has paid outsourcing firm Capita £217million more than the original value of its contracts with the company have sparked fresh concerns over ‘value for money’.

The council’s Labour group has renewed its call for all Capita-run services to be brought back under the town hall’s control and accused the Conservatives of being “ideologically wedded” to privatisation.

But the Tories have defended their “pragmatic” approach and denied the £217m was an overpayment, claiming the money was for “extra work commissioned by the council” and “entitlements [Capita] receive under the contracts”.

The council is currently on track to bring four services run by Capita – procurement, regulatory services, regeneration and highways – back under its control as part of a review of its two contracts with the firm.

The outsourcing deals with Capita began in 2013. Since then, the town hall has brought four services back in-house, while management of pensions was handed from Capita to the West Yorkshire Pension Fund in 2020 after The Pensions Regulator fined the local authority for poor data management and collection.

Councillors were updated on the progress of a review of the Capita contracts during a meeting of the financial performance and contracts committee on 7th October. Labour subsequently produced figures showing the council had paid Capita £551.81m, which is £217.93m more than the “total contract value” of £333.88m.

Speaking after the finance committee meeting, Labour’s Arjun Mittra said: “The Capita contracts have been a disaster, with a £2m fraud committed by a former member of staff due to appalling financial controls, a fine from The Pensions Regulator, and failure to improve the state of our roads and pavements, to list just a few issues.

“Barnet Council has paid Capita £217m more than the two original contract prices, but the Barnet Conservatives are ideologically wedded to privatising services and won’t bring the whole lot back in-house.

“Barnet Labour continues to argue that these contracts are not fit for purpose and all services should be brought back in-house.”

The review of the Capita contracts recommends allowing the firm to keep control of six services, including planning and development, IT and customer services. Capita is expected to be granted an extension to its deals for four more services while a more detailed review is carried out to determine the best course of action.

Responding to Cllr Mittra’s comments, council leader Dan Thomas said the town hall’s priority was “getting value for money for our residents”.

He added: “That’s why we take a pragmatic approach to our contracts with Capita, always seeking to make sure we make the best decisions for our residents. That has meant sometimes bringing services back in-house, and sometimes using Capita for extra services outside the original contract.

“The extra money that Cllr Mittra is quoting is not an overpayment. It is extra work commissioned by the council in addition to the core contracts we have with them as well as entitlements they receive under the contracts.”

The council leader said the Conservative group was “pragmatic”, accusing Labour of being focused on the past and having an ideological disdain for working with the private sector.

An outline business case for the insourcing of the four services due to be returned to the council is expected to be considered by the finance committee on 23rd November.

A joint spokesperson for the council and Capita said: “Barnet Council and Capita have carried out a formal review of the services Capita delivers in the borough. This is standard practice for any long-term contract.

“Many of the services were contracted ten years ago and have been reviewed to ensure that they continue to deliver the best possible service for people in Barnet. Innovation is at the heart of service improvements, and the review looked at how best to achieve this. The committee has agreed a direction of travel for each service, including the expectation that some services will return in-house, and that some others are likely to remain with Capita.

“Barnet Council is committed, with the support of its service partners, to delivering top-quality services that make the borough a better place to live, work and study for all.”

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