Barnet Council to bring IT systems in-house

Barnet Council is bringing its IT systems in-house as its contract with Capita Business Services expires. The decision follows the collapse of a planned outsourcing deal with Ultima Business Solutions, which sought to substantially increase its bid costs after a merger.

Deal Collapse and Cost Increases

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A deal agreed in May to replace Capita with Ultima Business Solutions was valued at just under £6.2 million for an initial three-year term. An optional two-year extension would have brought the estimated total cost to £10.1 million. However, Ultima Business Solutions announced a merger with Trustmarque Group in October last year. The council stated that this merger contributed to Ultima seeking to significantly increase its bid costs after the initial submission and evaluation.

Conservative opposition leader Peter Zinkin commented that the merged company's request for substantially more money suggested they had reassessed the risks associated with the contract at the agreed price. The council also noted that Ultima wished to make all existing Capita staff redundant on day one, passing on estimated costs of around £1 million to the council.

In-house Transition

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The council's cabinet had agreed in February to begin a procurement process for the IT management contract. Following the failure of the Ultima deal, the council conducted a review into the financial and operational benefits of insourcing its IT services, which confirmed its viability. Cllr Rawlings, the council leader, stated that negotiating a new deal with Capita would have been more expensive than the in-house option, even when accounting for pension costs.

Bringing IT services in-house is intended to allow the council to retain ownership of its technology operations, priorities, and decision-making. This move aims to provide clearer accountability, greater control over security decisions, and improved alignment on cyber security. The council believes this will create a more responsive and flexible approach to managing cyber risks by reducing dependency on external companies.

The transition to in-house IT management is planned for 1 October 2026. The council has a limited timeframe to manage this transition. Retaining existing IT staff currently employed by Capita is a key part of the plan to ensure service continuity, minimise disruption, and provide flexibility during the transition.

Deborah Hinde, the council's executive director for strategy and innovation, has been authorised to take all necessary steps for the implementation of this decision, including managing the Transfer of Undertakings (Protection of Employment) regulations for the affected workforce.