Councillors have agreed a compensation deal with Capita to make up for a series of failings in the outsourcing firm’s contracts.

The £4.12 million package covers problems with the roll-out of a new IT system for adult social care, the costs of dealing with a £2 million fraud and delays in providing housing on council-owned land.

At a meeting of the urgency committee today (Friday, November 30), council leader Councillor Richard Cornelius insisted the settlement was “a good deal for the council”.

He said it was important to draw a line under the issues, adding “we can’t go on for years locked into contractual disputes employing a host of experts to advise us on this”.

Cllr Cornelius said: “It is a commercial judgement, and I believe it is a good one, and I believe we should get on with it.”

But Labour leader Cllr Barry Rawlings refused to back the deal, arguing the matter should be decided by the full council rather than the urgency committee – which is only made up of three councillors.

Cllr Rawlings said: “The thing with an urgency committee is it can’t go anywhere else. It is decided just by the three of us and can’t be sent up to council.

“I would feel more comfortable if there was more information – and I would say not only should it go to the policy and resources committee; it should also be referred to council.”

The deal will also see the council keep all the savings made through better procurement – a sum that totalled £2 million last year.

Speaking before the main session, political blogger John Dix raised fears that the contractual changes mean £30 million-worth of savings earmarked for the next five years of one of Capita’s contracts would not be realised.

But although the changes mean Capita is no longer contractually obliged to provide the savings, council officers gave assurances they would still be delivered.

Cllr Thomas, the councillor’s deputy leader, said the fact that the council had outsourced services meant it was able to claim compensation for the failings.

He said that when in-house services fail, councils are often left to foot the entire bill.

Cllr Cornelius and fellow Conservative Cllr Thomas voted in favour of the deal.

Labour leader Cllr Barry Rawlings voted against it on the grounds that he felt the report should be considered by full council.

The decision means Capita will pay the £4.12 million to the council in January.