Lambeth writes off £18m as it ditches Capita
A council has dropped an £18 million law suit to speed up the process of taking administration in-house after sacking its housing benefit contractor.
Lambeth Council dumped Capita following a scathing Benefit Fraud Inspectorate three years into a seven year contract. The council's threat to sue Capita for up to £18 million has been dropped so the service can be brought back in-house more quickly.
The council started proceedings to end the partnership amid mounting subsidy to the contractor. (Inside Housing 8 June 2001)
The inspectorate report said radical improvements were needed to the ‘deeply inadequate' service, which Capita said included a backlog of 100,000 claims when it took over.
The council takes back in-house its housing and council tax service. But the company will be retained for IT support and for its call centre in Coventry.
‘Lambeth… is poor at even the
most basic management functions
Liberal Democrat councillors at the Labour-run borough demanded Capita was sacked and sued for compensation. But a spokesman for the council told Inside Housing if they did not retain the IT element a new system would be costly and a court battle could mean tenants suffering.
He added: ‘We will be reviewing that, naturally, but in the short term we do rely on that IT support.'
Following a visit in September the fraud inspectors said: ‘We are concerned that Lambeth have left themselves in a vulnerable position if Capita decided to end the contract, as Capita own the IT system and Lambeth would have to purchase their own.'
The inspectorate said the service was ‘very poor' in dealing direct with the public, was slow to pay, assessed benefit entitlement on very weak evidence, failed to protect IT security and did not handle fraud investigation effectively.
It added: ‘We found that Lambeth compounds its problems by failing to monitor the quality and speed of its work effectively.
‘We also found that Lambeth does not have clear lines of communication, either internal or external, leaving it vulnerable to error and delay, and is poor at even the most basic management functions.'
Capita group operations director, Paddy Doyle, said the company was handing back a much improved service: ‘We will now focus on ensuring a smooth handover of the core housing benefit service to minimise disruption for claimants.' He added.
Meanwhile two councils' in-house services received serious criticism in BFI reports. Lincoln's found ‘several areas where the council was not providing a satisfactory or secure service.'
Counter-fraud activity was weak and inspectors found the council was over-claiming weekly benefit savings.
Manchester council's report found ‘a very poor service to claimants.'
In renewal claims it ‘focused on ensuring that payment was made rather than making sure that the determination was correct.'
Both said they had worked hard to improve services since the BFI visits.
6 July, 2001 for an in-depth look at the housing benefit mess
Click here to see the reports on the Benefit Fraud Inspectorate's web site