Birmingham City Council has scrapped its controversial joint venture with Capita three years early.
Birmingham’s Bullring shopping centre – Photo credit: Joe Giddens/PA Archive/Press Association Images
Council leader John Clancy – who was elected last year after criticising the Service Birmingham deal in opposition – said this week that the Service Birmingham vehicle will be wound up by 2018.
The joint venture, Service Birmingham, was created in 2006, covering ICT, contact centre and revenue services and extended in 2010.
Clancy told the Birmingham Post: “I made it clear upon becoming council leader we could not continue to spend a vast amount of money on ICT given the tough decisions that have to be taken about cutting spending in other departments.
“This agreement means that Birmingham City Council will have more to spend on frontline services and to deliver key policy priority pledges on inclusive growth, housing and social services.”
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However, a subsequent statement from Service Birmingham made it clear that the break will not be completely clean, with the core services contract kept in place until 2021.
In a statement, it said: “The new partnership will deliver a mix of core services currently provided under Service Birmingham as well as additional project-based work enabling additional savings to be delivered over the next four years, helping the council to meet its objectives.”
A spokesman said that the partnership has delivered “significant savings” over the past 10 years, and the next phase of work would involve Capita implementing the council’s ICT & digital strategy covering 2016-2021. However, future contracts would be put out to the open market.
The council says that around 200 Capita employees will transfer to the city council under the new arrangements.
The Service Birmingham deal has faced criticism over value for money since it was created..
In 2012, a report by accounting firm Grant Thornton recommended that the council should renegotiate the contract to ensure payments are based on performance rather than call volume.
In 2014, the deal with Capita was reshaped to save £150m a year.
A report on the exact shape of the new arrangements is expected to go to Birmingham City Council’s cabinet for approval in coming weeks.