28 February 2003
Information technology contractor ITNet has been removed from Islington council's housing and council tax benefits contract. The London borough will take the service back in house on May 1.
Islington needed permission from its district auditor to end the contract and award ITNet an alternative contract for back-office IT work without going to tender.
There was also some good news for the company last week when it won £36m worth of business from another London borough, Richmond upon Thames.And it declared a pre-tax profit increase for 2002 of 29%, from £12.7m to £16.4m.
ITNet originally provided benefits services to Islington and neighbouring Hackney, but both were hit by severe problems with processing backlogs in 2000.
Hackney sacked the contractor in January 2001, and a spokeswoman said litigation continued. Islington renegotiated its contract instead and put in tougher penalties and targets.
The council's assistant executive member for housing, Terry Stacy, told Public Finance: 'We have given them a back-room role, and one condition is that they have no contact with the public.
'We wanted to take the service back in house and make the break clear to the public so they will see it is new.'
The current Liberal Democrat administration inherited the contract from its Labour predecessor in 1999.
Stacy said: 'The council wanted to end the contract. It has cost us a new IT contract for £1.9m. If we had ended the contract three years ago, it would have cost £5m.'
ITNet benefits staff, many originally council employees, will transfer to Islington.
A transition team, led by assistant housing director Ian Adams, will move to replace some 60 agency staff with permanent employees.
ITNet chief executive Bridget Blow said: 'We believe that with this new arrangement we have found the right solution for both ITNet and Islington.'
The company's new contract with Richmond involves the transfer of the council's IT staff and assets to ITNet, which will provide new benefits, finance and purchasing systems and enhance the council's website.
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