Fresh questions were raised about the value for money of the council’s contracts with Capita as councillors discussed a report into a £2 million fraud against the local authority.

Labour members of the audit committee yesterday (Thursday, November 23) raised doubts about whether the outsourcing giant – which has contracts worth around £500m with Barnet Council – could ever meet the standards required by the local authority.

The debate followed the publication of a report by consultants Grant Thornton showing five financial safety nets that could have stopped the fraud failed to do so.

These failures allowed former Capita contractor Trishul Shah to defraud the council of more than £2 million.

Guy Clifton, head of local government advisory at Grant Thornton, told the committee the financial controls the council had in place at the time of the fraud were “not the standard I would expect to find in a local authority environment”.

Caroline Glitre, the council’s head of internal audit, said a range of processes had been put in place to shore up the council’s financial controls.

Grant Thornton has drawn up an action plan to tighten up the contracts and council officers confirmed Capita was making adequate progress towards its goals.

Ms Glitre stressed that officers had acted “extremely quickly and robustly” once the fraud had been identified.

But Cllr Arjun Mittra, Labour member for East Finchley, said: “The simple thing to say is it is all a bit late.

“It is not shutting the door after the horse has bolted – the horse is already prancing around a field in the next county.

“One thing that really shines through this report is just how poor Capita’s systems are, that even their employees don’t even know how they work.

“The person who committed the fraud was seen as a figure of authority, but he was allowed to get away with it because he was the only person who seemed to know how the systems worked.”

Cllr Mittra said he had no faith that the extra measures being put in place by the council would make the contracts work effectively.

Fellow Labour member for East Finchley Cllr Alison Moore asked whether the extra safeguards that were being implemented should have been put in place by Capita at the start of the contracts.

The council’s director of finance, Kevin Bartle, said “My answer is absolutely yes.”

Kathy Levine, Labour member for Brunswick Park, said: “Thank you to our officers and Grant Thornton – but how much are we charging Capita for the consultancy we are providing for them?

“They are effectively getting consultancy for free – we are doing their job for them.

“We should not be doing it for them – we should be doing it ourselves.

“What confidence do we have they are going to put things right?”

Cllr Moore proposed a motion calling for an independent review of the council’s other contracts after questioning whether they could suffer from the same weaknesses that led to the fraud.

But Cllr Peter Zinkin, Conservative member for Childs Hill, questioned whether this would be good value for money coming on top of the audits and reviews already underway.

A review of the Capita contracts will be considered at a meeting of the policy and resources committee on December 11.

Cllr Moore’s motion was voted down by Conservative members of the committee.

Managing director of Capita local public services Jonathan Prew said: “We recognise that some aspects of our service to Barnet Council have not met the standard we and our client expect, and regrettably this detracts from the positive improvements we have made to some of the services across the council.

“We are committed to getting this partnership right, so we can carry on delivering vital savings for council and for taxpayers.

“We will continue to work closely with the council to ensure our service best meets their needs.”