Lambeth hopes to reach speedy deal with Capita

7 Jun 01
Lambeth council in south London is to consider waiving multi-million pound compensation rights in an attempt to make a speedy withdrawal from its ill-fated housing benefit contract with outsourcing company Capita.

08 June 2001

Members voted to take the contract back in-house last week after the quality of the service became 'unacceptable'. In a meeting scheduled for June 11 they are to consider further legal opinion on the issue of compensation rights.

Both the council and Capita are likely to have a legal right to claim compensation. Lambeth has ended its seven-year contract after just three and a half years, while Capita is said to have provided an inadequate service. Last year's 55,000-application backlog is now understood to be substantially worse.

But councillors are keen to transfer the service back in-house by July 1 and want to avoid any protracted legal dispute. A source at the council said they were likely to simply waive any future rights for a quick resolution.

'It is clear that if we allow Capita to continue to run housing benefit while we run up huge legal bills through the courts, then there is a high risk that the service would collapse,' said Lambeth leader Tom Franklin.

This week Capita revealed it has won more contracts in the first five months of 2001 than in the whole of last year.

The contracts secured, including lucrative deals with Darwen Borough Council and the London Borough of Croydon, are worth £720m, compared with £700m for the whole of last year.


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