Kent County Council has abandoned plans to privatise hundreds of “back office” jobs and pulled the plug on talks with would-be contractors.

The council was in talks over outsourcing its finance, personnel and ICT departments as part of efforts to save millions of pounds.

Staff have been told the plan has been dropped and the departments affected will stay in house.

KCC hoped the outsourcing could help bring down costs saying “significant financial and non-financial benefits could be delivered.”

The plan was a key part of the first phase of the authority’s “Facing The Challenge” programme, which involves outsourcing many services to save between £15m and £20m over three years.

The council had been in discussions over the summer with two companies.

However, these talks ended following what was described as “a robust evaluation” of whether they represented value for money.

Sources have told the KM Group the council had reservations about aspects of the bid and decided that in the circumstances, it should stop the negotiations.

In a statement to staff this week, the council said it would now move instead to creating a “Business Services Centre” to make sure “HR, Finance and ICT services continue to be delivered with maximum efficiency and cost effectiveness.”

The decision is a setback as the authority faces saving £90m from its budget next year because of government cuts.

In May, KCC was forced to defer plans for its library service to be handed over to a charitable trust in a move designed to save £3.27m between now and 2017.

Kent County Council has been asked for a comment but has yet to respond.