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Service Birmingham costs to fall by £150m after Capita takes a ‘pragmatic view’ to council contract renegotiation

Service Birmingham costs to fall by £150m after Capita takes a ‘pragmatic view’ to council contract renegotiation

🕔24.Jun 2014

Birmingham City Council is to save £150 million after renegotiating its ICT contract with Capita. The local authority said it expected costs to fall by just over £20 million a year up to 2021. And in a surprise move Capita-Service Birmingham will lose control of the city call centre, which is to be brought back under direct city council control.

The conclusion of 12 months of tough negotiations was broadly welcomed by members of the controlling Labour group with most councillors giving their backing to the new Service Birmingham contract at a meeting last night.

The decision to regain control of the call centre, which deals with hundreds of thousands of contacts from the public each year, drew widespread support. Most councillors routinely face complaints from constituents about poor service when attempting to phone the council.

City leader Sir Albert Bore said Capita had taken a pragmatic view and recognised the changing circumstances faced by the council, which has shed thousands of staff and faces £360 million of budget cuts over the next three years.

A clause in the existing contract enabling the council to withdraw ‘at will’ from the Capita agreement within 60 days will remain. A controversial 17 per cent mark up on purchases enjoyed by Capita has been removed.

Deputy council leader Ian Ward, who led the negotiations, insisted the cost of sacking Capita and bringing the entire ICT operation back in-house would have been prohibitive, but he declined to name a figure adding that details were commercially sensitive.

It’s believed that the cost to the council of Service Birmingham when the new contract is in place will be about £80 million a year – down from £120 million two years ago.

Cllr Ward insisted the savings would not be limited to £150 million. The council hopes to drive more value from the new contract by limiting the number of projects it requires Capita to oversee and reducing the number of IT applications run by the authority.

Brining the call centre back under council control is unlikely to be risk-free.

Capita was appointed in 2005 because the council did not have the expertise to develop a modern contact centre and had failed to invest in new technology.

Cllr Ward promised to introduce a “passion to resolve citizens’ inquiries first time.

He added: “It’s not just about how quickly we can answer the telephone or how polite the person answering the phone is. These things are important but we need ensure that queries are resolved to the citizen’s satisfaction.”

It’s expected that the call centre will be back under local authority control by the end of the year, with 500 employees returning the council.

Cllr Ward spoke of a “one contact vision” with an emphasis on “end to end service” which would ensure that as many queries as possible are resolved at the first point of contact.

He hoped the council’s relationship with Capita, which has not always been harmonious in the past, would improve.

He added: “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.”

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