The Chamberlain News

Birmingham Council’s Capita contract row heralds happy new year for m’learned friends

A pledge to publish Birmingham City Council’s £120 million contract with private outsourcing firm Capita has become bogged down in protracted negotiations between lawyers, it is claimed.

Council leader Sir Albert Bore said legal representatives from both sides had been arguing for four months about what should and should not be in the public domain.

He could give no guarantee that the Capita contract would be disclosed before the council sets its 2014-15 budget at the beginning of March, and he warned that “commercially sensitive” financial detail in the document would not in any case be released.

The row over disclosure of the Capita contract is threatening to move to a new, more dangerous stage with the possibility that the council will be subjected to a judicial review if it refuses to reveal key parts of the document.

Sir Albert was responding to a campaign led by Aston University Professor David Bailey to shed light on fine details of the contact, in particular the cost to the council of dropping Capita.

At the moment Capita runs all council ICT services, the call centre and payroll provision through a joint venture company called Service Birmingham. But the cost to the council – reportedly £120 million a year and £53,000 a day profits for Capita – has become a major issue in the debate around public spending cuts, and a source of embarrassment for the controlling Labour group.

Prof Bailey and Labour councillor John Clancy argue that it may be better value for money to terminate the Capita contract and award ICT services to a consortium of Birmingham-based firms. But the proposal succeeds or falls on the financial cost of axing Capita, with the council said to be facing a compensation bill of between £20 million and £80 million.

Members of the public can only make their minds up about the best course of action if financial detail in the contract is released, Prof Bailey insists.

An online petition launched by Prof Bailey calling for the contract to be published with as little redaction as possible has attracted 250 signatures, although significantly only two councillors have signed the petition – Cllr Clancy and Tory Phil Parkin.

Sir Albert told the main scrutiny committee that Prof Bailey’s petition was “unnecessary” because the council had decided last October to publish the Capita contract. An announcement was made by council chief executive Stephen Hughes on BBC WM’s Adrian Goldberg Show, Sir Albert insisted.

However, the council leader made it clear that “commercially sensitive” information in the contract would be redacted and could not be revealed.

Speaking to journalists after the meeting, Sir Albert said he expected much of the financial data in the contract to be redacted. He pointed out that the London borough of Barnet has published the contract it has with Capita, but the document is heavily redacted.

Sir Albert said the council would issue a report setting out the estimated cost of exiting the Capita contract and the cost of taking ICT services in-house.

He added: “I want us to publish the contract sooner rather than later, but I am in the hands of lawyers.”

Under the proposed budget for 2014-15, the council plans to reduce the cost of the Capita contract by £20 million. Sir Albert said negotiations with the company were continuing.

Prof Bailey said he could not understand why it had taken so long for legal negotiations to take place. And he warned of possible legal action if the “termination notice and fees” payable to Capita were not disclosed in the published contract.

Prof Bailey added that the council’s 2014-15 budget consultation process would be “put at risk of challenge” if details around the cost of terminating the contract were redacted.