BT and Capita – Outsourcing joint ventures under pressure in Liverpool and Birmingham

We wrote earlier this week  about the recent furore in the UK public sector around some of the major outsourcers, but pointed out that there have been some recent good news stories for the industry.  However, last week Liverpool Council announced some very interesting news that may indicate all is not plain sailing for the outsourcing firms. The Council has a long-standing joint venture, Liverpool Direct Ltd. (LDL), to deliver services in partnership with private sector giant BT.

Insider News reported this:

The future of the controversial Liverpool Direct Ltd (LDL), a joint venture between Liverpool City Council and BT, is to be discussed at a meeting today (28 February 2014). Mayor Joe Anderson has recommended the council's cabinet should endorse discussions with BT for the council to secure the ownership of LDL.

LDL delivers services including HR and Payroll, IT, revenue and benefits services. The Mayor said some positive things about the venture, but then added that because the Council has to find £156 million in savings following government funding reductions, it is time “to move LDL in a new direction”.  That may well mean the Council taking full ownership.  It all seems very amicable, as Neil Rogers commented for BT. (I think I remember him from my NatWest days, believe he was my account director – or maybe it was the DSS)?

“Neil Rogers, chairman of LDL and president of global government for BT Global Services, said: "Both BT and LCC agree that now is the right time to set a new direction for the relationship between us. LDL has had great success and was groundbreaking in its day but BT is working with LCC to agree whether a different approach would better help the city meet the increasing challenge it faces."

So did BT just feel that they couldn’t make enough profit out of the venture under the new tough reality of local government finance? Or did the Council want to go in a direction BT didn’t think was right? We’ll see how this pans out, but it will be making other outsourcing providers look over their shoulders, we suspect.

Not least in Birmingham, where there is local anger at how Capita, who run a similar jv with that council,  seem to be escaping the pain of funding reductions and job losses in the broader council. The heat is also building up there, as campaigners manage to extract more information about the contract, and the Birmingham Post reports on Professor David Bailey’s attempts to get more information about the contract.

“The most commercially sensitive thing about these contracts is that Birmingham’s Citizens have been paying £345,000 per day to Capita Service Birmingham under this contract. What’s actually really commercially sensitive is that they don’t want the Citizens of Birmingham to know exactly how they are able to charge every day more than Wayne Rooney is being paid every week under his new contract.”

If we continue to see local authorities under financial pressure, will that ultimately lead to more use of the private sector, to bring the skills needed to deliver services under tough circumstances ? Or will more councils think that they’ll have more flexibility and perhaps lower costs if they go it alone?

A fascinating question to consider over the next few years.

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Voices (2)

  1. Dave Orr:

    Meanwhile the litany of failing/failed joint ventures continues with some very serious issues underlying the BT Liverpool saga:

  2. dan2:

    Lancashire Council’s deal with BT is also worth a read…

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