Birmingham council to shrink enigmatic deal with Capita

By Tony Collins

Birmingham City Council’s IT services company Service Birmingham may take a hit in an £87m package of cuts, according to the Birmingham Post.

Council leader Sir Albert Bore is quoted as saying

“We have worked hard to reduce back office costs, including my target of saving £20m per year from our Service Birmingham contract.”

Critics are calling for further reductions throughout the full range of contracts with Service Birmingham – including those covering the council’s call centre, the council tax collection service, various ‘one-off’ projects and services to schools.

The costs of the contract are controversial and unclear. The Birmingham Post says that the “problem for those outside the council executive is that the terms and scale of the contract are hidden, meaning figures only come to the fore once accounts are published at a later date.”

Last month a revelation that the new library’s website cost £1.2m to set up brought complaints from small IT companies and specialists that they could have delivered it at a fraction of the cost.

The council’s leaders are under pressure from backbenchers to cut costs from this contract, before closing libraries and cutting park provision.

There have been calls to cancel the contract, but leaders say the council lacks the expertise to take over IT and call centre services

Professor David Bailey from the Aston Business School, a long standing critic of the Service Birmingham deal, said leading councillors were fudging details of the contract to make it look like a £20m cut from a £50m contract when it is from a £120m deal.

He called for the contracts to be published online to clear up the costs and exactly what is covered.

He said: “You can’t have an open and frank conversation with the taxpaying citizens of Birmingham about the future finances of the city if you aren’t actually open over key facts like the real overall cost of Capita Service Birmingham.

“Simply publish the Capita Service Birmingham Contract in full so everyone can make their own mind up about it before commenting on the rest of the City Council’s budget proposals. Barnet has done it. Why can’t Birmingham?”

Thank you to openness campaigner Dave Orr for drawing my attention to the Birmingham Post articles.

2 responses to “Birmingham council to shrink enigmatic deal with Capita

  1. Well said Professor Bailey,
    I have long stated that all public sector awarded contracts should be open to scrutiny with published price lists for services and supplied products.

    If all public sector organisations from Gov down made this a stipulation what would the existing suppliers do? kick up a stink yes but only in the short term. Their only other alternative would be to find business elsewhere, well so be it. Anyone who thinks that there would be no organisations left to contract with is deluded.

    The public sector has the ultimate sanction i.e. power over the cheque book. Open source at the contractual level would allow for unbiased value for money decisions to be made. This does not necessarily mean that all contracts would be awarded to the lowest bidder but it does mean that there would be an evidenceable trail which led to a decision on any let contract with suitable accountability and therefore governance over any such decision.

    When I supplied to the NHS, my company had an open book policy. All our prices were published and all our contracts were based on the standard terms of SYSCON and SSCON frameworks. We saw no need to deviate from them. Our chosen clients used them so we used them. Simple.


  2. Pingback: Hypothesis: Outsourcing reduces cost and improves quality | Calchas

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