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Birmingham council’s ‘brave new world’ of free-market competition

Birmingham council’s ‘brave new world’ of free-market competition

🕔22.Jul 2014

More Birmingham city council services are to face the brave new world of market competition as the local authority turns its attention to devising ways of making money out of the private sector, writes Paul Dale.


From October this year, civic catering, security staff, office cleaners and Birmingham City Laboratories will become part of Acivico – a company wholly owned by the council that was formed to trade outside of the public sector.

They will be joined by Shelforce, a UPVC windows trading unit set up by the council to employ people with disabilities.

These services will operate alongside a building consultancy, design, construction and facilities management which were transferred to Acivico two years ago.

The aim is to end the legal restrictions that prevent local authorities behaving as businesses and enable the services to win contracts from the private sector.

In theory, the changes will generate much needed income for the council if firms regard town hall catering, security and cleaning services as worth paying for.

If Acivico succeeds, jobs will be saved and the council will pocket the profits.

If Acivico fails, several hundred more council workers may find themselves out of a job.

The probability of success does not appear to be overwhelming, judging by progress so far.

Earlier this year a highly critical scrutiny report exposed Acivico’s poor performance.

The company was said to be experiencing a difficult relationship with its clients, did not always pay contractors on time and value for money was a major concern.

A new accounting system costing £800,000 was a year late in being delivered, leaving Acivico attempting to pay bills and organise contracts with unsuitable computer software.

The report also revealed that key performance indicators had to be suspended “due to ongoing poor performance”, while Acivico’s helpdesk was failing to deal with 35 per cent of calls a month.

Acivico is struggling even though the company has been granted a five-year exclusivity deal guaranteeing it the contract for every city council building project until 2017.

When the deal comes to an end, the company will stand or fall on its own feet.

Deputy city council leader Ian Ward is certain services under the Acivico umbrella will be seen as attractive trading options by “the world outside the council”.

Cllr Ward added: “We are set to lose two-thirds of the council’s controllable budget in the period between 2010 and 2018 due to Government funding cuts and increased pressures on existing services.

“This means we have to leave no stone unturned when it comes to finding ways that savings can be made, or in the case of Acivico, how we can maximise the income generating potential of the services we have.

“The four areas of business we have identified for possible transfer into Acivico offer first-rate services that definitely have growth potential on the open market – this proposal will enable them to trade more freely with the world outside of the council, and I am sure they will be seen in their respective fields as attractive options by people and businesses that require such services.”

Cllr Stewart Stacey, cabinet member for commissioning, contracting and improvement, added: “As was the case when Acivico was initially created, it is only right and fair to ensure that a stable transition period is created for the services that form part of this proposal.

“By offering a period of exclusivity on council work, we are giving the services a shop window from which to continue to showcase their activities and prove they are the best value options for the taxpayers of Birmingham.

“We are in challenging times, and it is clear the transfer of these services is in the best interests of them and the council.”

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