Birmingham City Council’s IT services company is set to take the single biggest hit in the £87 million package of cuts announced this week.
Council leader Sir Albert Bore pledged to reduce the costs of the core IT contract with Capita Service Birmingham by £20 million next year when he unveiled his draft 2014/15 budget.
The IT contract is worth something in the region of £50 to £60 million a year.
Sir Albert said: “We have worked hard to reduce back office costs, including my target of saving £20 million per year from our Service Birmingham contract.”
But critics are demanding even 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 – which combined cost the city council taxpayer £120 million in 2012 – the last confirmed figure available. 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.
According to briefings, the council already expects to spend a total of £97 million with the company next year, before the £20 million cut has been negotiated.
This is partly because the business transformation process, the setting up of new offices and systems to cut running costs, has ended.
Meanwhile, the number of one off projects, such as IT infrastructure for the new Library of Birmingham, are also being cut.
Last month the revelation that the new library’s website cost £1.2 million to set up caused uproar with small IT companies and specialists claiming they could have delivered it at a fraction of the cost.
The call centre costs the council about £13 million a year and this too is under negotiation, while further IT support is provided for schools.
The leadership has come under increasing pressure from backbenchers to cut costs from this contract, before closing libraries and cutting park provision.
There have even been calls to cancel it, but the leadership argues it lacks the expertise to take over IT and call centre services.
For critics a key problem is the lack of clarity around the various contracts – what is included and exactly what it costs.
Prof David Bailey from the Aston Business School, a long standing critic of the Service Birmingham deal and Post columnist, accused the leadership of deliberately fudging details of the contract to make it look like a £20 million cut from a £50 million contract when in fact it is from a £120 million 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?”
The council’s 2014/15 budget is out for consultation until January 10.
Complete service closures have been avoided, but it has already been confirmed that there will be a net loss of three leisure centres, and library closures are likely. A total of 1,080 council jobs are at risk.
There are also major cutbacks to public health services and a massive reduction in park services – including the loss of 32 park keepers and grass cutting reduced.
Sir Albert said that worse is likely to follow in 2015/16 as austerity continues. “I am pleased to say we have avoided closing any service in its entirety,” he said.
“There are reductions and, indeed, some facilities will go. But the wholesale cuts will come from 2015 onwards.”
Birmingham City Council budget cuts in a nutshell:
- Parks: 32 Park keepers to be axed, ranger service and grass cutting reduced, flower beds replaced with meadows to save £2.6m.
- Refuse Collection: £3m cut in street cleaning as wheelie bins rolled out. End to free doorstep bulky waste collection.
- Self-financing: Subsidies withdrawn from organisations such as Marketing Birmingham, Digital Birmingham and even the allotments to become self-supporting.
- Care services: no cuts to children’s social care, but more shared working with NHS to improve efficiencies.
- Children’s Centres: To be reviewed with increased financial support from NHS and schools sought.
- Green initiatives: Major energy efficiency drive and creation of power company to buy energy at wholesale prices to sell to citizens. Turn off or dim street lights late at night.
- Leisure Centres: Nine out-of-date centres to close, six new ones built. Services outsourced.
- Libraries: Closures likely as districts told to cut £5.7m.