Birmingham Council leadership contender John Clancy has likened the city’s multi-million pound ICT contract with Capita as an expensive “Rolls-Royce” luxury that can no longer be afforded.

Cllr Clancy said he would save up to £80 million by renegotiating the deal, or rip the contract up and offer the work to smaller local firms if Capita could not provide a cheaper service.

He is also promising to raise millions of pounds for public services by selling the council’s interest in the National Exhibition Centre, National Indoor Arena and Birmingham Airport.

Capita has been responsible for revamping the council’s ICT programme and call centre since 2005 and led a business transformation programme through joint venture company Service Birmingham.

The council has to pay Service Birmingham about £120 million a year, a sum that Cllr Clancy argues is out of all proportion with the value of the contract.

In his latest policy pronouncements, Cllr Clancy also pledged:

• A significant planned programme of asset sales, including disposing of the council’s majority interest in the NEC and minority Birmingham Airport shareholdings to pension funds.
• To establish a ‘Chamberlain Municipal Bank’ to provide and source community finance, basic services and utilities to Birmingham people where the market fails.

Cllr Clancy will stand against Sir Albert Bore for leadership of the council’s controlling Labour group on May 11. Should he win, he will become council leader.

His pledge to renegotiate the Service Birmingham contract may strike a chord with many Labour councillors who have been critical of the cost and value of the deal. Sir Albert is overseeing talks to cut about £20 million from Capita’s costs, but Cllr Clancy believes the figure is far too unambitious.

Cllr Clancy said: ““We cannot afford to be paying a tenth of our controllable budget in providing ICT and business services to ourselves and remaining schools. We have to decide what we can afford and pay no more.

“Service Birmingham should be forced to re-think and restructure the contract to meet our considerably reduced revenue and start again. Otherwise we should offer it to consortia of local SMEs instead who will undoubtedly be able to provide it within our revenue challenges, and enable us to absorb any exit cost.

“I do not think we can afford to pay any more than £40-50million a year through the Service Birmingham contract. We’ve been paying £120million. This is a Rolls-Royce contract formed in another era and it has to go in its present form.

“Again across the piece the private sector partners and contractors have to get real about our revenue situation. They have to cut their cloth to meet our inevitably new, reduced revenues and needs. We can’t afford to continue subsidising the big-business private sector with outdated, win-win contracts for them.”

He would use a structured sale of the council’s sprawling property portfolio to pay down an £850 million equal pay bill, thereby avoiding additional borrowing costs.

Cllr Clancy said: “We own too many commercial assets. We’ve forgotten why we own most of them. It’s a ridiculous thing for us to own literally billions of pounds of assets. In their present form, I say they have to go.

“We have to re-order our whole council away from such asset owning. We need, instead, to convert them into other assets or spending power in the economy that create housing and jobs.

“If we can use commercial asset sales to pay down £billions in debt, we should do exactly that: we should not be sentimental about which commercial assets we sell. And our current plans don’t go far enough.

“We should own buildings for families, homes and services, not commercial buildings. The NEC & NIA complexes and the Airport might better be owned by Pension Funds who would be happy to buy them.

“While the market is poor for sales, in the short term we should look at using asset-backed securities, placing assets into our very own wealth funds to release investment now in local housing, jobs and the local economy.”

Cllr Clancy said a municipal bank would provide affordable services for “ordinary Brummies” who were being excluded from basic services by the big banks.

He added: “I would look to ensure that our Municipal Bank is able to provide basic and enhanced banking services to Brummies to stop them being financially excluded, and to stop them having to pay more than the rest, especially when it comes to the basics like gas, electricity and water.

“I believe that we should look to provide in a range of other areas where market failure means some of the poorest, or all, Brummies get a bad deal. Municipal banking will lead the way and we will also look to provide insurance and savings.”

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