The council’s cabinet voted this morning to allow city mayor Joe Anderson to begin negotiations to buy out BT’s 60 per cent share of the Liverpool Direct Limited (LDL) company.

Established in 2001, LDL provides ICT infrastructure for the council, and will remain a standalone company, but become owned wholly by the council.

Anderson said: “As part of our three-year budget strategy – to find £156 million of savings following government funding reductions – we are reviewing all services. I believe it is now time to move LDL in a new direction.”

In autumn last year, both parties began negotiations over the contract cost due to the massive savings the council is required to make.

During the discussions, BT agreed a price reduction of £5 million in each of the next two financial years.

However, a report produced for councillors, said: “ Whilst the council really appreciated BT’s continued commitment to the city, the current budget deficit would require a far more substantive financial contribution from the Contract both for 2014/15 and for future years.

“Unfortunately BT feels unable to commit to any further price reduction within the contract as they need to sustain their own financial position.”

Officers believe that the transfer will enable the council to make more significant savings than those offered by BT.

Anderson will now begin negotiations with BT over the price the council will pay for the supplier’s stake, with a view to completing a deal by 31 March.

A transition plan will be put in place to transfer staff and assets to the council.

Neil Rogers, chairman of LDL and president, global government for BT Global Services, said: “Both BT and the council agree that now is the right time to set a new direction for the relationship between us. LDL has had great success and was groundbreaking in its day but BT is working with the council to agree whether a different approach would better help the city meet the increasing challenge it faces.”

The council’s move comes a month after Lancashire County Council decided to rescind its 40 per cent share in its own ICT services joint venture with BT.