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Mayor candidate promises ‘value for money’ probe into council’s £1 billion Capita contract

Mayor candidate promises ‘value for money’ probe into council’s £1 billion Capita contract

🕔02.Feb 2012

A Labour politician fighting to become Birmingham’s first directly elected mayor is promising an investigation into the financial relationship between the city council and its private sector ICT provider Capita.

Sion Simon says he will order the council’s £1 billion contract with Capita-led Service Birmingham to be independently audited to make sure the company is providing value for money if he becomes mayor in November.

His pledge follows a bitter row over attempts by Service Birmingham to cut costs by offshoring up to 100 jobs to Capita’s Indian headquarters near Mumbai.

The company was forced to backtrack after the proposal sparked a political storm.

Even though members of the city’s Conservative-Liberal Democrat cabinet had approved the offshoring proposal, they subsequently demanded a U-turn which Capita duly delivered by keeping all of the threatened jobs in Birmingham.

However, the cost of the reversal landed the council with a £2.176 million compensation bill this year followed by £1 million a year in payments to Capita over the next decade.

Mr Simon accused the cabinet of “being asleep at the wheel” during contract negotiations and of failing to notice the offshoring proposal until it was too late.

His intervention, with the firm promise of an inquiry, marks the first direct policy pledge of Mr Simon’s mayoral campaign so far. Independent auidts would also be conducted into all other arms-length private sector companies that the council has an interest in.

Mr Simon said: “The revelation that the council taxpayers of Birmingham will be forced to shell out more than £2 million pounds in compensation to Capita after the council leadership changed its mind about offshoring jobs to India disgraces both parties.

“First, the council should never have signed a contract extension with Capita which allowed the export of council jobs to India. Councillors and senior officers were, quite frankly, asleep at the wheel during these contract negotiations and were either too reckless or too naive in agreeing to such a move. Either way, it is an utterly unacceptable way of running our city.

He added: “But Capita does not get off scot-free. We need a full cost breakdown to see exactly what we are supposed to be compensating them for.”

His comments reflect growing unease among Labour city councillors over Service Birmingham. There have been numerous complaints about the council call centre at Fort Dunlop, which the company runs, along with concern at the performance of the city’s www.birmingham.gov website which Capita was paid to transform.

It is understood that Labour will seek to renegotiate the Service Birmingham contract if the party takes control of the city council at the local elections on May 3.

Mr Simon added: “Capita has a £1 billion contract with the city council and we are still seeing poor customer performance through their call centre while the council’s much-heralded multi-million pound website, which they are responsible for supporting, is still a weak advertisement for a global city.

“The buck should stop at the top for this sorry episode. Unfortunately, under the present administration, we know that it will not. But this can change – and will change – if we get an elected mayor.

“I propose having all the council’s major outsourced contracts independently audited to ensure we are genuinely getting value for money. They should be periodically reviewed too. We need to crack the whip a lot harder with big contractors who are often making vast sums of money on the public purse.”

 

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