2 councils cut costs of Capita deals, bringing hundreds of staff in-house

By T0ny Collins

Councils in Birmingham and Swindon are cutting the costs of their Capita outsourcing deals, in part by bringing hundreds of staff in-house.

Labour-controlled Birmingham City Council, the largest local authority in Europe, is bringing back about 500 staff after the council negotiated with Capita to cut £20m a year from the cost of running Service Birmingham, a contract which started in 2006 and has 7 years left to run, reports the Birmingham Post.

Service Birmingham is two-thirds owned by Capita and a third by Birmingham Council.

Deputy leader Ian Ward is quoted in the Birmingham Post as saying the changes would bring major savings and a greater degree of control over council communications.

“We have negotiated an agreement with Service Birmingham which provides a major step forward in reducing our cost base for ICT. On balance, the council considers the risk of changing ICT provider at this time too risky.

“It would take a considerable period of time to procure and would cost an additional tens of millions up front in early termination charges and re-procurement costs.”

The council will bring the call centre in house by the end of the year, as part of a “One Contact” vision to resolve queries at the first point of contact.

Councillors routinely face complaints from constituents about poor service when attempting to phone the council, according to a local political blog, The Chamberlain Files.

Ward said: “It’s not just about how quickly we can answer the telephone or how polite the person answering the phone is. These things are important but we need ensure that queries are resolved to the citizen’s satisfaction.”

The blog quotes Birmingham’s leader Sir Albert Bore as saying that Capita had taken a pragmatic view and recognised the changing circumstances faced by the council.

A clause in the existing contract enabling the council to withdraw ‘at will’ from the Capita agreement within 60 days will remain. A controversial 17% mark-up on purchases has been removed.

The council hopes to gain more value from the new contract by limiting the number of projects it requires Capita to oversee and reducing the number of IT applications run by the authority. Capita was appointed originally because the council did not have the expertise to develop a modern contact centre and had invested little in new technology.

Ward said he hoped the council’s relationship with Capita, which has not always been harmonious in the past, would improve.

“What I also want to see coming out of this challenge is for both parties to work harder to make the partnership work better than it has to date. We need to make sure we have an ICT strategy that is fit for purpose and that will improve our control and planning for projects.”

The contract’s cost has reduced from about £120m a year to £80m a year, says The Chamberlain Files.

Swindon Council

Conservative-controlled Swindon Council is set to save about £2m a year by renegotiating with Capita on back-office services, says the Swindon Advertiser. It says that around 200 Capita staff will move to the council’s employment.

A contract with Capita, worth more than £240 million, was signed in 2007 and was set to last for 15 years.

Council leader David Renard is quoted as saying: “A number of years ago we entered into a 15-year contract with Capita but we obviously now live in a very different world.

“The council has to find savings every year and that means nothing is off the cards, so we have asked to sit down and have a look at the contract.

“The potential saving of £2m is very significant so it is something we have to look at. In fairness to Capita, we have asked to look at the arrangement on a number of occasions and they have been receptive.

“We want to maintain a positive relationship with them because there are things, such as revenue and benefits, which they do very well.”

A Capita spokeswoman said: “Swindon Council has undertaken a thorough review of its budget and services, including those services delivered by Capita.

“The council is considering a range of options to ensure it delivers integrated and effective services and Capita is fully engaged in that process.

“Capita’s priority is to continue delivering high quality services to the council and residents in Swindon, and to keep our employees informed throughout the process.”

Since signing the deal with Capita seven years ago many of the services can now be provided in-house, said the Swindon Advertiser. The council has become less reliant on Capita for some of its services, it says.

The deal with Swindon Council has allowed the company to win contracts with other local authorities and there are now fewer specialists to dedicate their time to Swindon, it adds.