In a rare double piece of good news, Birmingham City Council leaders are celebrating two major successes on the financial front.
The much mocked business transformation programme, which is expected to save £1 billion over 10 years, has moved into profit for the first time.
When the costs of borrowing money to invest in the new IT systems for transformation is deducted, the programme will deliver £25 million in cash savings next year – a timely windfall given the likelihood of tough public spending cuts.
The efficiency programme received a glowing report from the Audit Commission, praising the council’s strong leadership and commitment to driving through business transformation savings.
Glyn Evans, director of business change at the council, said: “If it wasn’t for business transformation being put in place three years ago, we would be in a far worse financial position than is the case.”
At the same time, the council has managed to cut the cost of hiring outside consultants by £30 million, with the likelihood of further savings to follow. Last year the city spent £60 million on wages for private sector experts working on a range of projects including the new library and the Big City Plan.
This year the fee is expected to be £30 million, with managers under orders to do everything possible to reduce the cost even further. Leaked details about the payment of consultants caused a storm when it emerged that education director Heather Tomlinson was receiving £1,000 a day.
And Terry Brownbill, a PR expert hired by the council to protect social services from criticism over the death of Khyra Ishaq, is being paid £800 a day.
City officials insist the council does not have in-house expertise and must hire outside help. Requests to pay consultants more than £850 a day, or over £25,000 for the term of their contract, must be approved by cabinet human resources member Alan Rudge.
It has also emerged that the number of consultants hired by Service Birmingham, the council’s arms-length company led by Capita responsible for driving forward the business transformation project, has fallen by 38 per cent. Capita employed 381 consultants a year ago, the figure is 288 today.
Coun Rudge (Con Sutton Vesey) said: “I am very pleased. It’s been hard work, but something had to be done to bring the cost of consultants under control and to put in place proper procedures for hiring outside help.’’