Capita has reached a deal with Barnet Council that could see the outsourcing firm pay more than £4 million in compensation for failings in key contracts.

The proposed settlement is intended to cover problems with the roll-out of a new IT system for adult social care, the costs of dealing with a £2 million fraud and delays in providing housing on council-owned land.

Councillors will discuss the £4.12 million deal at a meeting of the urgency committee on Friday (November 30).

They will also consider changing the contracts with Capita to ensure the council keeps all the savings made through better procurement – a sum that totalled £2 million last year.

But while the council leader claims the settlement is “a good deal for the council”, the Labour group says it does not go far enough.

The council has set aside £4.2 million to find a new delivery partner for the Mosaic IT system, which was designed to streamline adult social care, after ongoing issues with the Capita-designed system.

It also commissioned consultants Grant Thornton to carry out a probe into a £2 million fraud by former Capita contractor Trishul Shah.

Barnet Council’s contracts with Capita are currently under review and some services that have been outsourced to the firm – including finance and strategic HR – could be brought back in house.

Leader of Barnet Council Councillor Richard Cornelius said “While the contracts with Capita have 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.”

“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.”

Labour leader Cllr Barry Rawlings said: “We welcome the Barnet Tories’ belated realisation that there are serious flaws in the Capita contract.

“Not so long ago they were stating that everything is fine and we ‘could sleep easy in our beds’ over the contract. It has turned out to be a nightmare.

“The £4.12million doesn’t even fully cover the budget the council has had to set aside for re-doing the Mosaic IT system.

“Capita seem to have got off from paying for any of the other listed failures mentioned in the urgency committee report. We believe where Capita have cocked-up they should cough-up.”

Managing director of Capita local public services Jonathan Prew admitted some aspects of the firm’s service had “not met the standard we and our client expect”.

He said: “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.”