Barnet Council faces a ‘major risk’ due to contracting firm Capita’s financial difficulties, the Liberal Democrats have said.

The party called for reassurance that the council has “robust plans” in place to ensure it could continue to provide services in the event of Capita’s “collapse” after the firm posted pre-tax losses of more than £500 million this morning (April 23).

Capita is the leading contractor in the OneBarnet programme, under which it provides services ranging from pensions administration to highway maintenance.

The council has contracts totalling nearly £500 million with the firm.

Earlier this year, contracting firm Carillion – one of the government’s main private sector partners – went into liquidation after racking up debts of more than £1.5 billion.

The Lib Dems called for reassurance that there would be no financial implications for taxpayers and that any money paid in advance to Capita in forward payments is safe in ring fenced accounts.

Roger Tichborne, Liberal Democrat candidate for Mill Hill, said: “Before people go the polls next Thursday, they deserve to be told the truth about the mess that the Tories have made.

“It is quite clear that if Capita are losing money on their current contracts, there are only two options. These are higher costs for customers such as Barnet or they will go bust. We need to know which of these we will be seeing and how it will affect us.”

Barnet Council’s deputy leader, Dan Thomas, commented: “In January, when Capita’s situation first came to the public interest, we had a motion at the council that said at the next Policy and Resources Committee we would look at the contingency plans. They are in place, but they are not needed now.

“The fact that Capita has made a loss does not mean it will fail. Its share price went up by 13 per cent this morning, because markets responded positively to its action plan. Many companies make a loss and shortly afterwards they make a profit. Capita are not on the brink of collapse.”

He added that Capita is almost “recession-proof” because a major chunk of its income comes from the public sector.