A deselected Conservative on Barnet council – one of the key battlegrounds in next month’s local elections – has used his valedictory speech to urge voters to back local Labour candidates.

Sury Khatri resigned the party whip in March, losing the Tories their majority on the council, when he was not selected to stand again in the north London borough.

Speaking at his final meeting on Thursday evening, of the council’s audit committee, Khatri claimed he had been the victim of a “rightwing and hard Brexit-based leadership coup”.

Barnet has been held by the Conservatives since 2002, but the local Labour group hope to take control of it on 3 May – though there are fears that the recent antisemitism scandal in the party may dent turnout in heavily Jewish wards.

The borough, which includes Margaret Thatcher’s old parliamentary seat of Finchley and Golders Green, has been a testbed for large-scale outsourcing of public services, through two huge contracts with Capita, which have seen it dubbed “easyCouncil”.

Khatri said that, as well as his political stance, he believed his criticism of the Capita contracts had led to his failure to be reselected.

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“My time at the council has been overshadowed by the disastrous Capita contracts, which is falling apart at the seams,” he said. “Four years on, issues still keep crawling out of the woodwork. This contract represents poor value for money, and the residents are being fleeced.”

Khatri then told the chair of the meeting, Hugh Rayner, another Conservative, who chose not to stand again in the marginal ward of Hale, “this is your last meeting too, as you have stood down ... all I can say is that the people of Hale will get a significant upgrade in the quality of their representation if they vote for the Labour candidates”. Khatri said: “I hope the residents deliver the right result on 3 May – Conservatives losing control.”

Richard Cornelius, the leader of the Conservative group, has insisted the deselection of Khatri and two colleagues was simply “democracy”, and the council will campaign locally on its record.

A report presented to the committee by the council’s auditors said fresh cuts will have to be made in the borough, in order to close a “budget gap” of £39.5m over the next two financial years.

“The savings targets are significant and achievement of these will be inherently challenging. Initial horizon planning suggests that there may be a further £32.5m of cost pressures in 2020/21 and this will need to be covered from reserves and additional savings plans to be identified,” the auditors, BDO, said.

Cornelius said: “The contract [with Capita] has delivered results for Barnet. We have saved money.”

And he denied the spat had anything to do with Brexit. “The Conservative party on Barnet council has not taken any position on Brexit - we’re about bins, not national strategy.”

Asked about Khatri’s statement, he said: “He’s expressed his views, and he’s been consistent: I can’t fault him on that.”

As well as Barnet, Labour hopes to seize other Conservative-run London boroughs, including Wandsworth, Westminster and Kensington & Chelsea – and Momentum has been organising a series of campaigning events to bring activists into swing wards.

Capita said: “The partnership between Capita and Barnet council is performing as expected in many areas. We continue to work closely with the council to make service enhancements as required.”