The Chamberlain News

Birmingham council banking on a smooth handover from Co-op to Barclays

Birmingham city council is changing its bankers, which is no small task for Britain’s largest local authority.

From April next year the council will use Barclays instead of the Co-op bank, which is facing severe financial problems and is withdrawing from all of its public sector contracts.

Barclays won a tendering exercise in May to provide Birmingham’s banking services, but a race against time has begun to make sure the council’s IT providers Service Birmingham work efficiently with the new bankers to deliver a smooth handover on April 1.

A report to the council audit committee warns that this is a high risk venture.

With about 15,000 staff to pay each month as well as some £1 billion of procurement per year and dealing with thousands of invoices for goods and services, the potential banana skins for any bank in charge of Birmingham city council’s money is clear to see.

Labour council leaders will be desperate to avoid the fiasco that unfolded six years ago under Birmingham’s Tory-Lib Dem coalition when Service Birmingham’s installation of the Voyager software programme for paying invoices resulted in a backlog of thousands of unpaid bills.

The cost to the council of switching from the Co-op to Barclays is just under £500,000.

But the council says it is confident of making substantial savings over the course of a five-year contract due to lower transaction fees and discounts, although the local authority is not revealing details.

The council is believed to have paid the Co-op bank about £1.4 million over six years for its services.

Jon Warlow, director of finance at the council, said the transition to a new bank had to be recognised as a significant risk.

Mr Warlow told the audit committee:  “A detailed risk analysis has been undertaken and is being managed as part of the overall project delivery.

“Key risks relate to the availability of resources in the council, Service Birmingham and Barclays to deliver this scale of system, procedural and documentation changes within the timescales available.

“A detailed project plan has been developed to help mitigate this risk and will be closely monitored. Service Birmingham also recognises the significance of this project and potential risk and is being treated as a high priority.”

Mr Warlow added: “The service being offered by Barclays is broadly in line with that offered by the Co-op, and there are a number of innovative solutions that should deliver improved efficiencies and reduce the reliance on cheques and cash.

“There will be a significant impact on a number of core IT systems and documentation that supports the banking process. Following discussions with Barclays we are re-assured that their approach to mobilisation will support a smooth roll out working in conjunction with Service Birmingham colleagues.

“Barclays has a network of approximately 27 local branches that will be available for use by members of the public to pay Council bills along with the Post Office network. This will be an improved service compared to the existing Co-op contract that only has one branch and the Post Office network.”

In order to win the Birmingham contract Barclays signed the council’s social responsibility contract and has agreed to pay all UK staff at least the Living Wage of £7.65 an hour.