Birmingham set to pull out of Capita joint venture in revenue collection overhaul

BIRMINGHAM City Council is set to pull out of the revenue collection arm of its pioneering public-private joint venture partnership, Service Birmingham and take the operation in-house.

The move is part of the council’s long-term goal to reduce its spending.

The future of the outsourcing service, which is run by Capita on the local authority’s behalf, will be decided by councillors at a meeting of today’s cabinet.

The council’s intention is to terminate the Revenues element of the contract, all except the bailiff services element.

The move, which could see 150 employees transferred to the local authority, was muted almost a year ago when the council reviewed its spending plans up to the end of 2020.

The local authority has come under repeated criticism over the scale and costs of the joint venture agreement.

The council has been in talks with the company to try and identify ways to reduce the contract price from 2016/17 until the end of the contract in 2021. The move could result in savings worth £10.5m between next year and 2020.

With the introduction of Universal Credit, the council is expecting to receive less calls relating to Housing Benefit, because people on Universal Credit will not be receiving this benefit from the council, they will be receiving it from the Department of Work and Pensions instead.

This would therefore reduce the volume of work through the Service Birmingham contact centre and reduce the need for the number of staff delivering the service.

The service has played a vital role in maintaining the city’s finances, collecting in the region of £750m of council tax and business rates every year.

“The maximisation of the taxable base together with the realisation of the collection of these taxes is vital to the ongoing viability of the city council’s budget,” states the report to today’s meeting.

Capita, obviously keen to retain a contract thought to be worth millions of pounds, had suggested a revised service to the council.

However, the report adds: “These were considered and it was concluded that they did not meet the current requirements of the council.”

It goes on: “The Revenues contract was let in 2011 before the introduction of a number of local welfare reforms in 2013 which have resulted in the council wishing to deal with Revenues matters differently.

“By delivering the Revenues Service in-house the council will be able to react to both existing reforms and any future reforms and allow for greater flexibility of the operation without the constraints of formal change control processes.”

As part of new working arrangements, the council has said it also intends to alter how it enforces collection of council tax for people receiving council tax support.

The council will continue to collect the council tax due, however, debts will no longer be referred to the enforcement agents or bailiffs. Instead, these debts will be recovered by either payment arrangements with the person concerned or through direct deductions from welfare benefits.

All other debts are expected to continue to be pursued through the usual recovery and enforcement methods.

Following termination, the existing bailiff function of the contract will be retained to facilitate continuity of service and minimise the risks of payment failures during transition.

“This will also avoid the additional costs that would be incurred if the current enforcement arrangements were changed around the existing IT systems,” states the report.

“The scope of the bailiff function will also be varied to meet the current requirements of the council to ensure a more bespoke approach to the recovery and enforcement of council tax and business rates debt and to continue to maximise collection rates.”

If approved, the new arrangements would come into effect from February 1, 2017.