Capita loses £50m council IT contract

Norfolk County Council has terminated a 10-year £50m payroll and pensions IT outsourcing contract with Capita six years early.

The council said a wider review of Norfolk's use of outsourcing in all divisions as a result of a new policy approach taken earlier this year towards the delivery of its e-government strategy is the reason for ending the contract. It was signed in 1999.

Both the council and Capita stressed there have been no problems with performance and revealed that Capita achieved 98.6 per cent against 70 performance targets in the last year, and exceeded those targets on more than 50 per cent of occasions.

Staff consultation has already begun and the plan is for employees who were transferred to Capita to be brought back in-house to the council from the end of the year.

Alison King, leader of Norfolk County Council, said in a statement: "This decision has not been taken lightly. However, time has moved on since the contract was signed back in 1999 and our needs and priorities as an organisation have changed. There is a strong commitment on both sides to manage the end of the contract smoothly. We remain committed to making sure our e-service programme is delivered in full."

The County Council and Capita are now working with advisors to agree details of contract closure arrangements. This will include payment to Capita for early termination of the contract.

Simon Pilling, executive director at Capita, said in a statement: "It is clearly disappointing that Norfolk County Council has chosen to end this contract at this time, despite the extremely successful performance of our core contract and the services we provide locally."