City council will save £150m after re-negotiating Service Birmingham contract

BIRMINGHAM City Council has re-negotiated its controversial outsourced Service Birmingham contract and says it will now save £150m over seven years by bringing some of the services back in-house.

The council has also said that 500 jobs will also be brought back in-house.

A report will go to the council’s cabinet on Monday to conclude the review of the Service Birmingham contract. It will be recommended to approve the continuation of the ICT and revenue contracts in return for substantial savings over the remaining seven years of the contract.

The local authority has come under pressure to reduce the cost of the Service Birmingham contract – a joint venture with Capita – which has cost more than £100m a year in recent years.

Birmingham City Council says a package of measures is expected to provide improved customer services and savings in excess of £150m over a seven-year period, enabling the it to deliver the ICT-related budgeted savings targets included in the its financial plans.

Cabinet will also be asked to approve bringing the council’s contact centre in-house by the end of the year.

Birmingham City Council deputy leader, Cllr Ian Ward, said: “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, would take a considerable period of time to procure and would cost additional tens of millions upfront in early termination charges and re-procurement costs.

“However, we are convinced that by bringing the contact centre in-house we can deliver additional financial savings, but more importantly place customer service at the core of what the council is about. We will be able to work more effectively with front line services to improve customer interaction.

“What I will 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 we improve our control and planning for projects.”