Capita joint venture with Birmingham council scrapped

Capita will continue to provide core services to Birmingham City Council until 2021

Capita's giant IT joint venture with Birmingham City Council has been dissolved.

Service Birmingham was set up in 2006 and saw Capita provide IT services to the council, along with services around council tax and administration.

The joint venture, 68 per cent owned by Capita and 32 per cent owned by Birmingham City Council, has come in for criticism and was at one point costing the council over £180m a year.

In a joint statement on behalf of Birmingham City Council and Capita, a spokesperson said that Service Birmingham will be dissolved but a partnership between the pair will remain in place until 2021.

"Over the past 10 years the partnership has successfully delivered significant savings," the spokesperson said. "To enable Capita to support the council's further cost savings objectives we have jointly worked up a proposal to reshape our commercial arrangements to allow greater flexibility to better cater for the future needs of the Council and its residents.

"The proposal, although keeping the core services contract in place until 2021, allows for the joint venture arrangement, which has some commercial restrictions, to be dissolved. The new partnership will deliver a mix of core services currently provided under Service Birmingham as well as additional project-based work enabling additional savings to be delivered over the next four years, helping the council to meet its objectives.

"Discussions on the proposal are ongoing, and a report is expected to go to Birmingham City Council's Cabinet for approval in due course."

While Capita and Birmingham City Council do not release financial details concerning Service Birmingham, documents are published on Companies House.

In the most recent report, for the 12 months ending 31 December, Service Birmingham reported a turnover of £86.6m - down 12 per cent on the previous year.

The employee base of Service Birmingham is currently made up of staff from both Capita and the council, and Capita expects this to continue.

The leader of council John Clancy however told Birmingham Post that he expects around 200 staff to be transferred back to the council.