Barnet Council chiefs have faced fresh questioning over the authority’s contracts with outsourcing firm Capita and a call to wind up one of the deals.

During a meeting of the finance committee on Monday, councillors were told “good progress” had been made on bringing five more services that were previously outsourced to Capita back under the town hall’s control.

A report presented to the committee ruled out publishing financial information on the returning services – highways, recruitment, regeneration, procurement and regulatory services – as doing so would “compromise the council’s negotiating position”.

The report reveals Capita overestimated the income that could be gained from the highways service but states that the council had still “benefited significantly” from an income guarantee included in the contracts. It also claims the increase in the costs of two services previously returned to the council was “quite significant” after extra staff were recruited.

Labour leader Barry Rawlings said the increase in staff following the previous insourcing suggested the number of people doing the work was one of the “weaknesses” of the original contract, and the figures actually suggested the services had become more efficient since being returned.

He added: “To me, it has always seemed from the start that there were savings being made by Capita, but they were entirely to do with pension costs, and therefore you were saving money by making workers poorer in the future rather than being particularly efficient.”

The Labour leader asked if the council could state “what the pension implications are of bringing the services back in house”. Committee chair Peter Zinkin proposed discussing the matter in the private session of the meeting.

In response to public questions, council officers said the income guarantee had delivered an increase in income of around £5million per year across all of the services provided through the ‘regional enterprise’ (RE) contract, which covers development and regulatory services, but this could not continue in its current form due to the insourcing.

Some of the RE services, including planning and development control, are set to be retained by Capita.

When questioned on the income guarantee, Cllr Zinkin admitted that a “substantial error” had been made when the contract was being drawn up, which had cost Capita “a significant amount of money”. He said that it had been hoped that Capita would sell the services more broadly across the local authority sector, but that did not happen, generating less income than expected.

However, Cllr Zinkin added that Capita “had to make that up” and had made payments under the income guarantee over the entire ten-year period of the initial contracts.

Another public question raised concerns over a statement in RE’s accounts warning that Capita’s latest financial statement includes “material uncertainties that may cast significant doubt on its ability to continue as a going concern”.

Cllr Zinkin said the uncertainty was linked to the council’s contract negotiations, adding that it was a matter for consideration “in the round, as part of the overall contract negotiations”. He said council officers would ensure that whatever is presented to the committee is “financially sensible in the context of RE”.

Cllr Rawlings proposed a motion to the committee to recommend that RE be wound up at the end of the contract and the services brought back in house. Labour members voted in favour of the motion, but it was defeated when the Conservatives voted against. Liberal Democrat leader Gabriel Rozenberg abstained, saying he was unsure of the financial implications of the move.