Barnet Council was grilled about its finances last night following the publication of a report into a £2 million fraud by a former council contractor.

Labour councillors and members of the public warned the council the failings that led to the fraud could affect other outsourced services at a meeting of the financial performance and contracts committee yesterday (Tuesday, October 9)

Members of the Labour group called for the Grant Thornton report into the £2 million fraud by former Capita contractor Trishul Shah to be discussed in public – even though officers said this would be impossible due to concerns over commercial sensitivity.

The motion put forward by Labour members was voted down by Conservative councillors, and the press and members of the public had to leave the room while the report was debated.

Despite this, the repercussions of the fraud continued to be discussed during the public part of the meeting.

Council officers reported that the financial position of the council had improved compared to a forecast made earlier in the year.

The council was forced to take urgent action after revealing in a June meeting of the policy and resources committee it was facing a budget gap of £9.5 million for 2018-19.

Director of finance Kevin Bartle suggested there were signs this action was paying off, pointing out that the overspend on the council’s general fund had been cut to £2.5 million after drawing on reserves.

He also said the council planned to ringfence some of the money set aside as reserves.

Mr Bartle said: “Hopefully this will give you some confidence we are moving in the right direction, as I continue to emphasise the importance of trying to balance the books by the end of the year.”

Officers assured councillors that Capita had compensated the council for the costs associated with the fraud and the subsequent investigations.

But concerns were raised that problems identified in the Grant Thornton fraud report could apply to other services that had been outsourced by the council.

Local blogger John Dix pointed to an apparent discrepancy between spending on agency staff set out on the council’s website and the figure presented in a report to the committee.

He said: “Along with the findings of the Grant Thornton report, I am worried we are not getting an accurate picture of Barnet finances, and they are in a worse state than we see here.

“I need reassurances this council is not going bust – and I do not see it here.”

Kathy Levine, Labour member for Brunswick Park, said a report into the council’s contracts showed there were issues with data quality and a lack of clarity over roles and responsibilities.

She said: “These are all issues that have come up in another place we are not allowed to talk about.”

Cllr Levine said the report suggested there were “huge cultural problems” in the way Capita operates.

Council officers are currently working on a report into the costs of bringing a range of services that have been outsourced to Capita back under the council’s control.

The Grant Thornton report will be discussed in public at a meeting of the council’s audit committee on Thursday, November 22.

A copy of the report is also available on Barnet Council’s website.