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Some more work for Capita

Some more work for Capita

🕔17.Jan 2013

Outsourcing firm Capita is undertaking a review of all Birmingham City Council private sector contracts in an attempt to drive down costs and secure efficiencies.With the local authority buying in goods and services worth £1 billion a year, Labour council leaders have identified procurement as an area where large-scale savings might be made to offset public spending cuts.

Cllr Stewart Stacey, cabinet member for commissioning, contracting and improvement, is working with deputy council leader Ian Ward to “critically examine contract management across the city”.

Capita, which  has contracts worth £1 billion with the council and runs the  joint venture ICT company Service Birmingham, has been asked to support the investigation, Cllr Stacey confirmed.

A separate inquiry into Service Birmingham’s contracts is underway to identify substantial savings to the council.

The review of all contracts comes at a challenging time for the council’s private sector partners who are under pressure to sign up for a Social Responsibility Charter committing them to pay the Living Wage to staff. Those refusing to pay staff a minimum £7.20 an hour will not get work with the city council in future, according to Cllr Stacey.

The council expects the cost of procurement to rise by about £11 million a year as firms seek to pass on the Living Wage costs. But the Capita review could produce significant savings.

Cllr Stacey said: “The first stage of the review is to see how contracts are managed with the support of Capita. This will identify areas of excellence and areas where support might be provided.”

The investigation is expected to distinguish between “want and need”, Cllr Stacey told a scrutiny committee. He said the city’s difficult financial position meant services had to be “needs driven” and that the council could no longer simply respond because people “wanted” a certain service.

Cllr Stacey said he was committed to giving a greater number of council contracts to smaller, local firms but was meeting resistance from local authority officials.

He added: “I am in discussion with officers about the level of turnover a company has to have to get a contract. The officers have a view that in order not to risk a company going belly up that they should be of a certain size relative to the contract they are getting.

“My view is that is not always justified.”

Conservative councillor Philip Parkin warned that some small firms would tell the council to “forget it” if they were forced to adopt the Living Wage because they would not be able to afford to do so.

It would be would be impossible for the council to monitor the level of wages paid by private firms without access to pay rolls, Cllr Parkin warned.

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