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Capita partnership recycling Birmingham council money unless it finds new customers

The city council's joint venture with Service Birmingham should be torn up unless more IT packages can be sold to outside agencies.

The city council’s joint venture with Service Birmingham should be torn up unless more IT packages can be sold to outside agencies, a meeting was told.

Under the joint venture deal Birmingham City Council and Capita share profits but the council is by far the organisation’s biggest client.

Councillor Ken Wood, a member of the contracts and partnership scrutiny committee, said unless Service Birmingham is selling services to other agencies the joint venture arrangement is a waste of time.

He spoke as the committee looked at how the council plans to save £20 million a year from the core IT contract following renegotiation last year.

Coun Wood (Cons, Sutton Newhall) said: “We are trying to cut the cost of the contract and while we can reduce service, we could also raise income. But I don’t see any evidence of that. It is supposed to be a joint-venture with a profit share – but if it is a case of the council paying money in and then getting some profit back we are just recycling our own money.”

The new chief executive of Service Birmingham Tony Lubman replied there were some external clients for Service Birmingham applications and services – including schools and a wing of Capita providing services for Sheffield City Council.

He said: “Some of the biggest challenges are around growing the business and growing outside the city.” He urged the council through its links with schools and other authorities – perhaps through the proposed Combined Authority – to act as salesman for Service Birmingham.

“I would be happy to give anyone a price for our services. We are happy to have those doors opened for us .”

Mr Lubman, who took over as chief executive last month, has been charged with ‘resetting’ the relationship between the council and Service Birmingham after a difficult few years.

Supporters of the deal say it has transformed the Council’s IT services, bringing its IT and communications into the 21st Century.

But it has also been heavily criticised as hugely expensive, restrictive and designed to prioritise Capita’s profits over quality of service and value for money for taxpayers.

At the peak of the relationship in 2011 the city council spend £120 million on Capita contracts and services. Since then it has taken the call centre back in house and cut the number of one off projects.

The committee was also told the council is to invest a further £50 million in new computer systems between now an 2020 when the contract ends.

They also learnt the council’s computer system came under a major attack from hackers late last week when there were 24,000 unsuccessful attempts to breach the security. Mr Lubman said that as a major local government institution “We are a target.”

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