Joint Venture targets £1bn savings
A new deal struck by Birmingham yesterday could save the council up to £1 billion.
The local authority selected leading outsourcing and business support giant Capita as its preferred strategic partner to provide a wide range of services and transform the way the council works.
The ten-year contract will be delivered through an innovative joint venture company called Service Birmingham Partnership (SBP). Up to 450 of the local authority’s staff will be seconded to the new company, which will provide them with state of the art business tools and training opportunities to create a world-leading centre of excellence in transforming government services. Initially SBP will manage an ICT contract worth an estimated £424 million over the lifetime of the contract that will develop a modern IT infrastructure and robust framework.
Further work is likely to be commissioned through the partnership to support the Council's services and this will increase the value of the contract as the partnership incrementally grows and delivers measurable benefits to the people of Birmingham.
The new deal is still subject to approval by the council cabinet, which will vote on the issue on 12 December.
Speaking on the new deal Deputy Leader, Councillor Paul Tilsley, said, “We have undertaken a detailed evaluation of excellent proposals from leading companies. We feel that the proposal from Capita offers the Council the best solution and best value for money. The Council will benefit from the expertise that Capita can bring in contributing to major changes to complex public organisations. We have estimated that the partnership can potentially help us achieve savings of £1bn over the ten year term. Capita will create a new business centre in Birmingham and has guaranteed to bring hundreds of new jobs into the city during the course of the deal. This demonstrates Capita’s commitment to the city, their support for the Council’s priorities and their determination to help us make Birmingham a leading international city.”
Success in this venture will place Birmingham firmly at the forefront of local government. The new Joint Venture Company provides a vehicle through which the Council can engage the private sector whilst retaining control over public services.
Acting Chief Executive, Stephen Hughes, added, “ In order to achieve the ambitions of the Council we need to the transform the way we work. To do this, we need the help and support of an organisation such as Capita. I am confident this partnership brings value to the city. As each transformation project will be awarded separately as the process unfolds, it is not possible at this stage to put a specific figure on the savings we might achieve. However our estimate is in line with our target for a 15% improvement in productivity through business transformation”.
Both Capita and Birmingham will own significant shareholdings in the new company.
