Bournemouth Council is facing calls to bring back its workforce in-house after troubled contractor Mouchel went into administration as part of a restructuring deal.

Demands to ‘insource’ council staff follow a controversial £300m deal with Mouchel approved by councillors last October. Under the contract, Bournemouth added its human resources and finance departments to existing outsourced arrangements for IT, revenues and benefits and facilities management.

Having raised concerns in an email sent to councillors ahead of the crucial vote approving the deal, Bournemouth’s chief accountant, Stephen Parker, was suspended on full pay until reinstated this April.

Leader of Bournemouth’s independent group, Cllr Anne Rey said: ‘We were against it as opposition councillors and we were proved right. We wouldn’t be going into partnership with this company now on such a big scale.

‘They had all the warnings and I think everything should come back in-house now and give the opportunity to the staff to say how they could do better,’ said Cllr Rey

Under the terms of Mouchel’s restructure, which followed last Friday’s rejection by shareholders of a £87m debt for stock deal, its assets were sold to MRBL Ltd, a new firm owned by its main bank lenders and management. Mouchel chief executive, Grant Rumbles, said the restructuring would secure the long-term future of the firm and help preserve 8,000 jobs.

In response, leader of Bournemouth Council, Cllr John Beesley, said: ‘Of course, we continue to manage, monitor and review the contract closely, to ensure that service targets are being met within the agreed contract price, so guaranteeing ongoing savings to the council.

‘It essentially remains business as usual for our incremental partnership and our relationship with MRBL remains strong as they continue to deliver.’

Elsewhere, a spokesman for Milton Keynes Council, which last week announced it would radically alter its contract with Mouchel, claimed it would be ‘business as usual’ despite the restructure. Around 700 of Milton Keynes’ employees in various services – including revenues and benefits, highways, ICT and property – will be brought back in-house under the new arrangements.

A council spokesman said: ‘While the council has a business continuity plan in place to deal with a number of scenarios, Mouchel’s news does not in fact affect how we currently deliver services in Milton Keynes, or the proposals to transfer services and staff which we talked about earlier this month.’