BUSINESS outsourcing giant Capita is seeking to renegotiate a lucrative ten-year contract with Southampton City Council just three years after it struck a landmark deal.

But an initial offer by Capita has been rebuffed as inadequate and the council thinks the service provided by the firm could be better.

Capita wants a five-year extension to its contract, taking it to 2022.

It has offered to slash the annual charge it makes to run back office council services by £180,000 a year from April. In the past six months Capita has been paid £14.6m by the council in fixed charges, according to newly released data.

But council officer in charge of the contract Paul Medland said the offer was “not an adequate return for a five-year extension”, and added: “There is certainly scope for improved service delivery”.

The controversial contract, worth £290m over ten years, saw Capita take over council departments such as customer services, IT, human resources, property, tax and benefits departments in return for guaranteed savings of £33m. More than 650 staff transferred.

The firm says it has already saved the council £17m in its first three years and is confident it will make the remaining savings within the next two years.

Councillor Jeremy Moulton, Cabinet member for resources, said: “Capita are a valued partner, helping Southampton City Council to deliver efficiencies and savings. While the priority of Southampton City Council is to make sure Capita fulfil their current obligations, the door is open to future negotiations, as long as it is to advantage of the local taxpayer.”

A Capita spokesman said: “Capita works closely with its customers to deliver efficient services and value for money.

“Across the public sector, organisations are under increased financial pressure and we partner with our customers to help address these challenges wherever possible, through a range of innovative and creative solutions.”

Negotiations with the council are not expected to start until next year.