Council squeezes BT in JV renewal

Liverpool City Council has renegotiated its Liverpool Direct joint venture with BT to include cash for social housing and community projects.

The massive joint venture, amongst the largest public-private company in the country with 1,300 staff, was formed in 2001 and runs the council's ICT service, call centre, information centres, together with handling human resources, payroll, revenues, benefits and social care call centre.

The council said the new deal was a response to the public spending cuts facing the city and the need for new jobs. Last year, a council report claimed the authority was being overcharged by £10m a year by BT.

The key points in the new deal are:

  • £1m a year for an apprenticeship fund to generate up to 65 posts annually for local residents, graduates from the city's universities or those returning home from other higher education establishments
  • £12m to support social care, social housing or community development between now and 2017, front-loaded to include £9m from 2012 to 2015. The council will decide where and how the money is spent, and it can be match funded
  • A price reduction on the contract of £9m phased between 2011 and 2017, which the city council can direct to other priorities. This is made up of £2m for 2012/13 and £1.5m/year for the remaining years
  • A share of third party business generated by the partnership for the city council, estimated to be worth £1m, including payment of money already generated
  • Sponsorship of £1m over the remaining contract period for a city council project. For example, BT currently sponsor the Convention Centre in a deal which ends next year
  • £17.5m to be invested by BT in ICT improvement projects such as replacement computers, software system improvements and website improvements

The local authority has also increased its shareholding from 19.9% to 40%. The number of council directors on the board will be increased from one to three including an independent non-executive director, and a partnership framework will be created to make sure there is an effective working relationship.

In addition BT will write off potential legal contractual claims they estimate at £56m such as for non-payment of money they have spent on systems and areas of business that weren't transferred into the contract which formed part of the original 2001 agreement.

Anderson added: "This is a contract that was not of our making, and one of the first things I did when I became leader was review it and ask BT to come forward with new proposals to rebalance it and make it more of a genuine partnership.

"I was pleased with their positive response, and am satisfied that the proposed deal will see us get a better deal for council tax payers.

"This is not just about getting cash savings and improving services, but also creating additional opportunities which will benefit the city at a time when our budget is under extreme pressure due to severe spending cuts from central government.

"I am therefore pleased that the deal addresses our priorities as an administration, including the creation of hundreds of apprenticeships and funding for social care, housing and community projects which will genuinely make a difference to the lives of many in our city.

"This marks a fresh start for our relationship with BT, and I am committed to making sure the whole council is able to continue scrutinising the partnership to make sure it delivers for Liverpool."

The council's cabinet will be asked to approve the final offer at a meeting on Wednesday 29 June. The joint venture contract is due to end on 31 March 2017.

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