Northgate will be responsible for providing ‘welfare resilience’ which it said covers benefits changes, new claims and any backlog work.
The supplier will also be responsible for free school meals, local welfare provision, hardship payments and any other welfare processing needs. The deal is for two years with an option to extend it to three.
Northgate promised that it will “reduce the potential for losses previously incurred through administration, such as overpayments.”
The firm said that 10 other London councils have already declared an interest in signing up to the framework, which would bring its value up to £8 million if its lasts for two years and £12 million if its runs for three.
A spokeswoman said: “With regards to the other 10 councils, we are in discussions with them and will be holding a seminar in October for them to attend so we can take them through the options and sign up route.”
The processing service will be delivered from Northgate’s recently-opened Hartlepool office and will include support to deal with any follow up calls, e-mails or letters, she added.
Tower Hamlets’ back office ICT, finance and HR is outsourced to Agilisys via a £70 million deal signed in 2012.
Steve Hill, Head of Benefits Services at the Tower Hamlets Council said: “Our partnership with Northgate will provide us with a comprehensive service, offering more flexibility, security and value for money.
“We have seen how Northgate offers innovative solutions to councils and government and we are looking forward to working with them to build on an efficient and effective partnership in Tower Hamlets and with our wider London partners.”
Northgate is one of the biggest service providers for revenues and benefits in the UK and currently provides remote processing services to over 50 local authorities.