Thurrock Council is to pay £10m to end its back office services contract with Serco.
Leader John Kent (Lab) said he expected savings of £3.5-4m a year by taking the work concerned back in house in November. The contract had cost Thurrock £20m a year.
It was originally signed in 2005 with Vertex – which was taken over by Serco in 2012 – and would have run until 2020 with an optional five-year extension.
Cllr Kent said: “We have agreed to pay just under £10m to end the contract – a lot of money, but only half what we have paid Serco, and before that Vertex – in the last few years, and would pay them each and every year for the next five years too.
“In these times of austerity we would rather any profits, so to speak, went direct on services to local people rather than Serco’s shareholders.”
The £10m due to Serco included compensation for loss of profit and payment for the council taking over computer and telephony equipment.
Some 350 staff will join Thurrock under the transfer of undertakings protection of employment (TUPE) regulations.
The Serco contract included customer services, administration, facilities management, procurement, human resources and payroll, revenues and benefits and information technology.
Cllr Kent said Thurrock would review all its outsourced services and staff to see if others should be taken in house.
Serco’s managing director for citizen services Sean Hanson said: “Serco is a leading provider of services to local authorities.
“Unfortunately this old contract with Thurrock Council was no longer fit-for-purpose and it was in the interests of both Thurrock Council and Serco to end our partnership early.
“Our teams have delivered services over the last ten years in support of local residents and I am proud of their achievements. Our priority now is to work with the council to ensure that this transition is as smooth as possible for all concerned.”