Surrey County Council has faced a call for a scrutiny investigation into its part in paying off Virgin Care in a dispute over the loss of a contract.

The council, along with six Clinical Commissioning Groups (CCGs), paid an undisclosed amount to the firm, which sued after losing a contract for children’s services.

Liberal Democrat County Councillor Hazel Watson asked Councillor Helyn Clack, cabinet member for Health, about the pay-off.

She said: “Is the cabinet member saying that members of the public will never know how much council taxpayers’ money was sent out, and will she agree to a scrutiny investigation of the serious flaws that have arisen to ensure that they do not recur?”

A written reply to an earlier question about the amount, Cllr Clack said: “Virgin Care began legal proceedings against a number of parties including Surrey County Council alleging irregularities in the procurement of the contract to provide children’s and young people community health care services throughout Surrey.

“The proceedings have now been settled on terms that are confidential to the parties. Disclosure of those terms by any of the parties could lead to enforcement action against that party. I am therefore not able to provide the information that the councillor has asked for.”

According to the Health Services Journal, Surrey Downs CCG listed in its monthly accounts a liability in the case of £328,000, but removed it from its website once asked about it.

A statement on behalf of all parties, given by Guildford and Waverley CCG, said: “The parties are pleased to confirm that an agreed resolution on the litigation concerning the Surrey Children’s procurement has been reached to a satisfactory conclusion for all parties with detailed terms confidential to the parties.”

Virgin Care, set up by Richard Branson in 2010, lost out on the £82 million contract, and sued the county council, six CCGs and NHS England, citing “serious flaws” in how the contract was awarded.