Birmingham to scrap IT JV in cost-cutting drive

BIRMINGHAM City Council is set to scrap a joint venture for ICT services in a bid to save around £43m.

Service Birmingham, a partnership between the council and Capita, launched in April 2006.

In addition to providing ICT, the JV is also responsible for running the council tax and business rates administration service.

At its peak in 2011, the contract reportedly cost the council £120m a year. This year's cost will be around £70m, according to the Birmingham Mail.

The council and Capita have now agreed to dissolve the JV by March 2018, with 200 staff transferring back to the authority. Capita will, however, continue to provide the council's IT services until the scheduled end of the contract in 2021.

In the future, the council plans to offer smaller deals for systems, maintenance and updates, and to allow local suppliers to bid for work against Capita.

Council leader Cllr John Clancy, who prior to becoming leader had criticised the deal as a "Rolls-Royce contract" in a time of austerity, said winding up the JV will save around £11.5m this year, which could be used to protect services such as social care, libraries and parks from further cuts.  

"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," he said.

"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."

A Capita spokesman said:: "To enable Capita to support the council's further cost savings objectives, we have jointly worked up a proposal to reshape our commercial arrangements to allow greater flexibility to better cater for the future needs of the council and its residents.

"The proposal, although keeping the core services contract in place until 2021, allows for the joint venture arrangement, which has some commercial restrictions, to be dissolved."