Outsourcing company Capita has agreed to pay more than £4m compensation to Barnet Council for its poor performance - but will continue providing services until at least next year.
A report to the Tory-run authority's urgency committee says the payback will settle 'historical commercial issues, including delivery of IT improvements in adult social care and delays in delivering housing on council land.'
The council will also end the current gainshare arrangement so that it will keep all the savings achieved through better procurement – last year amounting to £2m.
It plans to take finance and strategic HR services back in house by April next year and consider the future of other outsourced functions including land and property, highways, regeneration, strategic planning and cemeteries and crematoriums.
The latest decision follows conviction for fraud of a former employee of a joint company set up by the council and Capita, 38-year-old Trishul Shah.
The joint venture was denounced by Labour as a 'textbook example of why outsourcing fails'.
The report by Grant Thornton following an investigation said the council had insufficient oversight of the joint company which 'gave the individual access to cost centres on the ledger for illegitimate purposes'.
Commenting on the latest decision, council leader Richard Cornelius, said: 'While the contracts with Capita have saved millions of pounds a year, there are some services which have not been up to scratch.
'What’s important is that we take action and taxpayers can be confident we are managing their resources effectively. Agreeing this settlement payment represents a good deal for the council.'
