UNIONS have predicted an exodus of staff after Southampton councillors approved a deal to hand the running of key services to a private company.

After a crunch debate the council decided to award Capita a ten-year deal to run customer services, IT, human resources, property, tax and benefits.

It will involve the transfer of about 650 jobs. Unison members staged a last-ditch demonstration on the steps of the Civic Centre as councillors arrived for the meeting.

Branch secretary Mike Tucker pleaded in vain for councillors not to go ahead with the deal.

The minority Tory administration backed by Liberal Democrats voted it through. Mr Tucker said council workers in line to be transferred were already leaving the council in record numbers.

"If you go to Capita in a few years time the majority of staff won't be former council workers," he said.

He said that while a few would benefit from better pay the majority would lose out.

Mr Tucker added that one fifth of similar contracts had failed, landing councils with increased costs, and he feared the deal would open the way for further service transfers.

Proposing the acceptance of the contract, Cabinet member for resources Councillor Jeremy Moulton, set out the benefits including £25m investment in IT to transform council services.

He said payments to Capita would be based on quality of performance. There were guaranteed savings without risks, understood to be about £28m. Pension rights of workers remained protected.

Cllr Moulton said providing an in-house alternative would be riskier, slower, more expensive and with no guarantee of service improvements or savings. Labour finance spokesman Peter Marsh-Jenks summed up his party's opposition: "On financial grounds alone it would be idiotic to vote for this - and we are not idiots," he said.

Labour leader councillor June Bridle admitted her party would have to accept the will of the council and would not try to sabotage the contract.

She said council staff would now be working for a private company against their wishes.

"If it doesn't impact on the services I will be very surprised," she said.

Lib Dem group leader Councillor Adrian Vinson said the city would have paid a very dear price for passing up the contract.

Cllr Moulton called the deal an excellent result for Southampton, adding: "We will save the taxpayer millions of pounds over the term of the contract - money which can be put back into front line services.

"It's good news too for council staff being transferred to Capita as they will gain from more career opportunities and will enjoy a more modern working environment."

The council will formally sign the contract early next month.