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UK's Birmingham Council to bring Capita contact centre back in-house

Charlotte Jee | July 7, 2014
Cabinet says cancelling mega outsourcing deal with Capita now ‘too risky’ but it plans to terminate it early.

Birmingham City Council (BCC) has agreed to take its contact centre away from current provider Capita and bring it back in-house.

Under a £1 billion contract that expires in 2021, Capita provides ICT, contact centre and revenues services to the UK's largest council through the joint venture known as Service Birmingham. The Service Birmingham contract was designed to help the council cut costs and find some of the £300 million a year in savings that it needed to make over three years after the government cut the council's funding in the 2011 Spending Review. The contract, dating back to 2006, costs the council roughly £120 million every year.

Due to central government funding cuts for the next year, the local authority has been forced to review all its services to find an extra £150 million of savings. In analysing the Service Birmingham contract, the council decided to bring the contact centre part back in house, but stopped short of cancelling the whole outsourcing contract with Capita, which had been one of the proposals.

It decided at a meeting on Monday to reject this plan because of the risks and costs associated with it.

In a statement BCC said: "On balance, the council considers the risk of changing ICT provider at this time, too risky, would take a considerable period of time to procure and would cost additional tens of millions upfront in early termination charges and re-procurement costs."

However, official council documents published at the same time as the council meeting reveal that BCC is still preparing to terminate the Service Birmingham contract early.

An appendix to the internal 'Service Review Options' report said that the council needs "to plan for end of contract early with continuous testing of value for money".

In the document BCC also admitted that it needs a clearer ICT strategy, better controls over projects and better client management and governance.

Contact centre savings
The council expects to provide its own contact centre from 1 November 2014, which it says will save £42 million over the next seven years. The 500 contact centre staff will TUPE transfer from Service Birmingham to the council.

This is part of a total package of £150 million in savings until 2021 that deputy leader Ian Ward claimed the council has negotiated during the cabinet meeting this week.

During the meeting, Ward claimed that bringing the contact centre back in-house will improve the service the city offers to its residents.

He said: "We believe it will put us in control of our own shop window and customer experience and therefore we will be able to improve the end-to-end service that the people of this city receive from both the contact centre and the city council as a whole.


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