Council stands by £200m IT deal

COUNCIL officials this week insisted that their controversial £200 million deal with BT will save money—despite claims that a similar partnership went more than £120 million over budget.

Rotherham Borough Council said that its 12-year link-up under which the private telecomms giant BT runs all the council’s IT and phone systems would bring overall savings of more than £50 million.

The deal has four more years to run, but questions have been raised about the cost after another authority with a similar deal ended up paying millions more than expected.

RBT, one of the first such partnerships to be set up in the country, attracted opposition at the time and received scores of complaints in the opening months.

Criticism resurfaced this week after Suffolk County Council’s BT deal reportedly cost £127 million more than forecast over ten years.

One reader, who did not wish to be named because his wife was a former council employee, said that he was concerned that the Rotherham final figure could rise.

He said: “Rotherham is ‘in bed’ with BT like Suffolk, where it was supposed to cost £300 million over ten years, but has cost £427 million to date, a 42 per cent increase.

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“And remember the Rotherham deal was done by a council leader and a chief executive who both later left the authority.”

It is not known if Rotherham Borough Council has tried to renegotiate the deal in the light of huge cuts in its budget from government’s public spending cuts.

But a spokesman insisted: “We have always been clear that the joint venture between the council and BT is a £200 million contract for the delivery of services in Rotherham.

“The joint venture has seen service quality improve and benefits and savings realised in line with or ahead of expectations.”

The council’s own figures show that in 2010/11 the service charge to the council from RBT was approximately £15.8 million.

The bill was for:

  • Human resources and payroll services—£2.9 million.
  • Staffing contact centres and joint service centres—£1.3 million.
  • Procurement of goods and services—£1.6 million.
  • Collecting council tax and business rates and administering benefits services—£4.6 million.
  • ICT support services—£5.1 million.
  • Other services—£300,000.

The spokesman explained: “This has remained relatively fixed, and is index-linked year-on-year.

“In addition, the council has spent additional amounts through RBT, primarily relating to specific systems development work.

“An independent ‘Value for Money’ review by a major private sector accountancy firm put savings across the life of the contract at £53 million. These are being delivered. 

“Additionally, a review of the strategic partnership in 2007 identified further cost savings that could be achieved during the remaining period of the contract, totalling £22 million.

“The council is currently working with colleagues in RBT to deliver these savings, whilst simultaneously exploring additional opportunities which are expected to result in further savings. Progress is as expected.

“At the end of the contract, scheduled for 2015, staff seconded to RBT from the council will return to the council and the partnership will be dissolved.

“Ahead of that time, the council will formulate options for the delivery of services currently being provided by RBT and will determine the most advantageous way forward.

“This may be to deliver the services itself, or to enter into a strategic partnering arrangement—via a competitive tendering process—for the delivery of some or all of the services currently delivered by RBT.

“Equally, other options for the delivery of services will be considered, for example, delivery in partnership with another council.”

 Last October council chiefs came under fire after shock figures revealed the truth about the cost of refurbishing Rotherham’s £3 million Town Hall—including chairs and coverings totalling £310,000, while wallpaper and decoration cost £154,000, toilet fittings £119,000, carpets £111,000 and kitchen facilities £98,000.

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