BASIC services such as housing benefits and IT systems will not be affected by the collapse of council contractor Mouchel.
The service provider went into administration on Tuesday – just over a week after Milton Keynes Council announced it is severing ties with it.
Council bosses have refused to reveal how much quitting the 12year, £21million contract will cost, but this newspaper believes it will be more than £5m.
Chief executive David Hill and his top officers are this week in hard negotiations with the troubled company in a bid to agree a settlement sum.
Mouchel Business Services Ltd employs more than 600 staff based at the council and is responsible for much of the day to day workload and administration.
Running everything from housing benefits to the IT systems, the company was three years away from the end of its contract.
The company operates separately from Mouchel Group Plc which has been taaken over by creditors RBS, Lloyds Banking Group and Barclays and re-branded as MRBL.
The decision to privatise the council’s inner workings was taken in 2004, mainly to increase the “customer friendly” image of the council.
But over the years councillors and officers questioned the value for money. Two years ago, then leader Sam Crooks negotiated a new deal after “weaknesses” were identified on both sides.
This week Tory council leader Andrew Geary said: “We are very confident we can manage our services ourselves now. We will save money and maintain or increase the level of service.”
All Mouchel staff will be taken on by the council and residents will see no change, he said. But Liberal Democrats are still sceptical.
“Clearly the council is in financial chaos,” said Mr Crooks. “What that means is more cuts.”
Talking about Mouchel Plc entering administration, a council spokesman said it would be ‘business as usual,’ adding: “While the council has a business continuity planin place to deal with a number of scenarios, Mouchel’s news does not in fact affect how we currently deliver services, or the proposals to transfer services and staff.”