Capita and Birmingham City Council make up with new services deal

Services deal will replace the recently scrapped Service Birmingham joint venture

Capita and Birmingham City Council have agreed a new IT services deal after scrapping the mammoth Service Birmingham joint venture.

Service Birmingham saw Capita provide IT services to Birmingham City Council from 2006, but was came under constant criticism for at one point costing upwards of £180m annually.

The council said that the core services contract with Capita would remain in place once the joint venture is scrapped and has now confirmed a new "more flexible" four-year partnership to deliver savings of £43m by the end of 2020/21.

Cllr Ian Ward, deputy leader of the City Council, said: "As is widely known, the shape and objectives of the council are changing due to a wide range of factors including reduced funding for local government, changes in population profile and an ever-altering technological landscape.

"Our ICT and digital service needs to support and lead in achieving those objectives, while providing flexibility, added value and having the ability to continue delivering a day-to-day service while making this transition.

"This deal will see the council gradually take more control of its ICT and digital strategy over the next four years, with Capita and the council working together. Through these negotiations we have been able to secure the savings we need to protect frontline services and start the ball rolling on the process that will enable us to meet the challenges of the future."

The council reiterated that the Service Birmingham joint venture was flawed by commercial restrictions, with the new services contract set to be in place until 2021.

The proposal will go to the council's Cabinet tomorrow (27 June).

Capita had not responded to CRN's request for comment at the time of publication.

The outsourcing giant also announced the sale of its Asset Services business late on Friday in an £888m deal with Australian share funds administrator Link Group, which it claimed would help reduce its debt.