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Council’s £20m Capita savings target moved to ‘some risk to delivery’ box

Council’s £20m Capita savings target moved to ‘some risk to delivery’ box

🕔28.Jul 2015

Birmingham city council’s claim that it will save money on its ICT contract with Capita is being questioned after the authority’s latest accounts showed no progress had been made in delivering the latest cut.

A savings target of £6.8 million for Capita-led Service Birmingham, the council’s joint venture ICT company, has been moved to an “actions in place but some risk to delivery” column in the revenue budget report.

The admission was seized upon by opposition Conservative finance spokesman Cllr Randal Brew at a cabinet meeting. He was concerned that the savings might not be achieved since no progress had been made a quarter of the way into the financial year.

Cllr Brew claimed that £6.8 million, if it was achieved, would only represent a third of a promised £20 million annual saving.

Labour council leader Sir Albert Bore blamed the lack of progress on “complex issues”.

Sir Albert said some of the actions to be taken in respect of the Capita savings were far from straight forward. However, he added: “I have no indication yet that we won’t be able to reach the target”.

The council brokered a deal with Capita just over a year ago which it said would reduce ICT costs by £150 million – £20 million a year up to 2021.

The agreement brought to an end two years of rows between the council leadership and Service Birmingham over the cost of the relationship with Capita.

In addition, a further savings package was agreed with Capita in addition to the £150 million.

New three=year savings targets are £6.8 million in 2015/16, rising to £9.6 million in 2016/17 and £12.5 million in 2017/18.

Under the deal, the cost to the council of Service Birmingham is expected to fall from £120 million to about £80 million a year. When the deal was signed deputy council leader Ian Ward said he believed savings would not be limited to £150 million by 2021 and that the authority could squeeze more value out of its relationship with Capita.

When the deal was signed Cllr Ward said:

What I also want to see coming out of this challenge is for both parties to work harder to make the partnership work better than it has to date. We need to make sure we have an ICT strategy that is fit for purpose and that will improve our control and planning for projects.

As well as exposing the lack of progress on delivering the Capita savings, the council’s accounts indicate other challenging financial issues.

The council is heading for a potential £22.3 million overspend at the end of 2015-16.

The figure is made up of £11.2 million of unfunded service pressures and £11 million of planned savings that are at risk of not being delivered.

Jon Warlow, the council’s director of finance, said:

This is a higher figure than at this time last year but is not unusual over the post 2010 period. It reflects the increasing complexity and difficulty of the council’s change and savings agenda.

The council is facing a twin problem – the need to identify 110 million in savings this year as a result of Government public spending cuts, and a relentless increase in the demand for and cost of delivering adult and children’s social services.

The cost of placing children in care homes outside of Birmingham is running £3.3 million above expectations, while a £5.5 million savings target to be achieved by moving young adults with learning disabilities from residential care to independent living has been declared “simply too ambitious”.

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