The Chamberlain News

Capita cost-cutting progress ‘not as good as we would like’, deputy council leader admits

Capita-Service Birmingham has been given a clear warning that it must do more to find ways of cutting the city council’s ICT costs and that progress so far has not been fast enough.

Deputy council leader Ian Ward said he believed Service Birmingham would achieve a promised £140 million of savings over the final seven years of its contract, but work on finding additional savings “has not been as good as the council would like”.

And in a clear warning, Cllr Ward said Service Birmingham must act as “an enabler, not a blocker” to achieving change.

Capita has been put under notice by council leader John  Clancy to substantially reduce the £90 million a year cost of managing the city’s ICT services, or risk losing its contract.

Cllr Clancy is keen to explore the possibility of using a consortium of local firms to carry out the work if a new deal cannot be reached with Service Birmingham.

He is understood to have told Service Birmingham chief executive Tony Lubman that substantial savings beyond the £20 million a year already agreed must be found quickly.

A report by Cllr Ward reveals that a new operational plan for Service Birmingham showing how the council’s expectations of its ICT department will be met, with clear lines of accountability for outcomes, and stating what is included in the core contract costs, has still not been drawn up. The plan was supposed to have been completed by November 2015.

Mr Lubman has been told he can no longer attend meetings of the council’s executive management team “to avoid any perception of conflicts of interest as EMT debates the future delivery options for council services”.

In his report to the main scrutiny committee, Cllr Ward said:

I am pleased to report that good progress has been made in some key areas. A number of positive joint initiatives have been put in place or actions taken to improve some of the working practices and mechanisms which underpin the day to day working relationships with Service Birmingham.

But there are also some areas where we all recognise that more work is needed. It is early days for the new management team structures put in place by Service Birmingham to help strengthen its focus on the needs of our services and on helping them to meet their business outcomes.

Progress on additional savings has not been as good as the council would like and has had its challenges. Efficiencies in some cases rely on significant cultural change, services accepting corporate system offers rather than service specific standalone systems as part of the applications rationalisation or reductions in council staff headcounts at a time when the level of demand seems to require additional capacity.

Cllr Ward said the council would continue to be “diligent” to ensure it was getting “real value for money” from its relationship with Capita against a backdrop of financial austerity for local government. He added:

There is also recognition that Service Birmingham must play its part in enabling or contributing toward the unprecedented financial challenge that the council faces to find a further £250 million of savings over the next three years across all its services and controllable expenditure.

Service Birmingham continues to help us explore options to achieve this and we must jointly remove any barriers to delivering those savings while ensuring we maintain fit for purpose, effective services that support our front line priorities.

The council would have to explore “fundamentally new ways of working and delivering services”. Cllr Ward warned:

Service Birmingham needs to do its part in meeting these wider imperatives and it must act as an enabler not a blocker to achieving change. This will require a continued focus on different ways of working together and a consistent consideration of flexibility, scalability and innovation to support this.

The deputy leader said the council was delivering a far-reaching change agenda following the Kerslake Review and expected Service Birmingham to behave as an equal partner.

He set out several priorities for Service Birmingham:

• Reducing IT spend where practical and challenging unnecessary expenditure.
• Helping to identify opportunities to share systems, capabilities and re-use approaches and solutions
• Finding innovative IT solutions to drive out savings at a price the council can afford or on a clear invest to save basis.
• Challenging ICT that does not deliver value or creates further costs of change.