Barnet Council to award £320m outsourcing contract to Capita on Thursday

Capita has won the race to take over a number of key Barnet Council services in an outsourcing deal valued at £320m over 10 years.

The business-process outsourcing specialist will take over the running of the Council's "new support and customer service organisation" (NSCSO), which rolled up a number of administrative activities into one group. These include finance and payroll, call centre operations, customer services, IT infrastructure and support, and procurement.

The London Borough of Barnet claims that the deal will save it £125.4m over the term of the contract – a saving of about 28 per cent, although some 180 jobs will be lost over the same 10-year period, while 197 jobs will be relocated to some of Capita's other locations across London and the UK.

Capita has guaranteed "standards and levels across all NSCSO services, whilst at the same time reducing the operating costs of these services by at least 45 per cent in real terms over the period of the partnership," according to the council.

In addition, Government Computing reports that Capita will be investing £8m upfront in IT and customer services. The contract, it adds, will formally begin in April 2013. The £320m 10-year cost of the contract compares with the £600m-£750m value advertised in the Official Journal of the European Union in June 2011.

Councillor Richard Cornelius, the Conservative leader of Barnet Council, told the BBC: "The bottom line is that this will give us £120m to spend on public services in Barnet that we would not otherwise have. The alternative... is to make much bigger cuts in front-line services and jobs over the next couple of years."

However, the Labour opposition on the council claimed that the deal would deliver neither better services, nor financial savings.