Local government row leaves Northgate feeling Hackneyed

The £10m pound contract is to provide and maintain desktop PCs and servers for all Hackney's council workers except those in the departments of education and benefits and revenues. Revenues and benefits is still covered by a deal with ITNet, which has descended into a prolonged £70m contract wrangle.

Northgate was unable to sign a £0.5m deal for support services because of contractual issues arising from the ITNet dispute. The legal battle has also delayed the signing of a deal worth a further £10m for provision of CRM technology to link various council IT systems.

Chris Stone, chief executive of Northgate, told silicon.com: "The deal is not contractually dependent on the ITNet issue. It is just that Hackney's IT people are all spending so much time on the ITNet issue they haven't got time to think about anything else."

ITNet has had to write off £25m on the disputed ten-year contract with the near-bankrupt Hackney Borough Council. The company has also been named in a damning report regarding neighbouring Islington, published by the Benefit Fraud Inspectorate in December last year.