A joint ICT service agreed between two London councils could be spun out into a standalone company within two years.

London Borough of Islington last week agreed the plan to merge its ICT service with neighbouring borough Camden.

Camden approved the proposal earlier this month, meaning that the initial set up under a single ICT head scrutinised by a joint committee should be operational by April.

However, a report by officers at Islington said: “A longer-term option would be to move from the joint committee structure towards a more commercially-orientated model.

“It is proposed that a full review of the options for such a new model would be completed within 18 months of the go-live date.”

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The initial structures and arrangements for the joint committee will be designed in a flexible way to make any move to a new operating model easier, the report said.

The two councils have calculated that joining forces could save them £4m a year, with £2.5m of that coming from reducing the current joint headcount of 300 down to around 250.

The move has been prompted by worries over government cuts, which will see both councils needing to save a combined £185m by 2020, along with concerns over a shortage of skilled staff.

Upfront investment to deliver the merger has been estimated at £5m, covering project support, restructuring costs and platform/infrastructure costs.

The report said: “Bringing the two ICT services together is expected to have positive outcomes for residents, as it will help to accelerate progress on resident-focussed ICT projects that will improve residents’ interactions with the council. It will also allow the councils to work collaboratively to address digital inclusion issues and ensure that we support residents in their digital lives.”