Birmingham City Council’s uneasy relationship with its private sector IT provider Capita has been likened to warring parents who have little in common but agree to stay together for the sake of the children.

The tounge-in-cheek comparison was made by Carl Rice, chairman of the main scrutiny committee, who said that both sides would benefit from the services of a marriage guidance counsellor to help solve their differences.

Cllr Rice was commenting during a hearing about an independent study into the performance of Service Birmingham, the Capita-led company that has an £1 billion contract to deliver council IT services and the local authority’s call centre until 2021.

A ‘health check’ study by Best Practice Group (BPG) concluded that Service Birmingham had given value for money in providing core IT services, but that the partnership with the council deteriorated following the end of a business transformation programme.

The study pointed to a lack of trust and understanding on both sides, and warned: “There is an inherent risk that unless a core focus for both parties is re-established, the commercial trust between Birmingham City Council and Service Birmingham will continue to deteriorate.”

Cllr Rice added: “Capita is a multi-million pound company with loads of contracts around the world. Birmingham City Council is the largest local authority in Europe. Why are we sitting around the table like this discussing things that aren’t working?

“Quite frankly, we are all fed up to the back teeth.”

The city council’s new Labour administration has published a ‘road map’ setting a year-long deadline to get the joint venture partnership back on track and has ordered Service Birmingham to reduce its costs by £20 million a year – £180 million over the course of the remaining contract – as a contribution to public spending cuts.

Sentiment among many Labour councillors is running strongly against Capita. Most members report regular complaints from constituents about the performance of the call centre and the length of time taken for housing and street services requests to be dealt with.

It is possible after 12 months that the council will decide to renegotiate the Service Birmingham contract, placing the partnership on a more commercial footing.

Another option is to cut the contract short next year and find an alternative private supplier, or move IT services back in-house, although there would be significant cost implications from such a move.

A cultural challenge in maintaining a positive relationship between two giants of the public and private sectors – Birmingham City Council and Capita – is at the root of the relationship problems.

BPG’s study warned: “Some city council officials are not really taking into account, or understanding, that Service Birmingham is a commercial organisation that has a majority shareholding by a publicly listed company. Its commercial shareholders need to see financial returns from Service Birmingham that increase annually.”

Service Birmingham chief executive Stewart Wren launched a passionate defence of Capita at the scrutiny committee, singling out local journalists for apparently giving a misleading picture of what was happening. The journalists, and some councillors, did not have an “appropriate understanding” of what the partnership was delivering, he added.

Public-private joint venture companies were notoriously difficult to get off the ground and often did not last very long, but Service Birmingham was one of the best examples of its kind in the country, Mr Wren claimed.

Mr Wren said: “I am really proud of what’s been achieved. A whole stream of private and public sector organisations have come to Birmingham because they have heard about this wonderful thing that is happening here.

“The contact centre isn’t perfect but compared to many private sector and public sector ones it is in the top quartile of performance.”

However, Mr Wren conceded that the future success of Service Birmingham rested on sorting out the “behavioural problems” identified in the BPG report. He also hinted that some of the £20 million savings required by the council might be achieved by investing in automated voice recognition equipment at the contact centre, or responding to some inquiries by mobile phone text messages.

Labour councillor John Clancy, who has often questioned the performance of Service Birmingham, said there were deep rooted problems with the partnership.

Cllr Clancy told Mr Wren: “You get way too much money for vague data provision, there is stagnating innovation and we have a health check that suggests things are flat lining.

“It is unacceptable for you to say we have misunderstood.”