For the last two years Birmingham City Council have been procuring a contract for a Public Private Partnership for delivery of services in Birmingham. Despite assertions to the contrary from council management, a number of significant concerns have been raised by interested parties. Yesterday UNISON Birmingham Branch Issued the folowing press release:

Press release…..Press release…..press release……..

UNISON Birmingham Branch – contact Graeme Horn for comments 07813357078

Selling off the family silver
Birmingham City Council Cabinet members have made the decision to choose Capita as their preferred partner for a Strategic Partnership and plan to transfer IT services to a joint venture company on the 3rd of April. UNISON wrote to the Cabinet Members before the decision was taken asking them a series of questions and raising our concerns about the proposed transfer but our letter was ignored.

Following the Cabinet decision, we wrote to members of the Scrutiny Committee asking them to call in the decision for a review. Labour members of the Committee did this but when the full scrutiny Committee met they decided not to review the decision. The meeting was held in private and so to date we have not been informed of the reasons for this decision.

The points we put to elected members to consider before making their decision can be found on the attached sheet.

What UNISON thinks
The partnership is not just about transferring IT services to a joint venture company(actually a sub subsidiary of capita). It is far more wide reaching. The joint venture (JV) will have a say in all future City Council decisions. Instead of just bringing in consultants, the JV will look at council priorities and will give their opinion on the way services should be transformed.

The Council will hold a golden share in the JV but when questioned the Council would not say what this would enable them to veto. We have also asked how any profits made will be shared but were told this had not been finalised yet.

Capita made no secret about their intentions to look at both Council procurement and the property portfolio. In their document titled Capita Responses to Staff Questions – August 05 they state in point 59 “Our initial views would be to start with projects that release funds, such as our proposals around procurement and property, as these would support the affordability of the remaining transformation programme.” In 70 they go on to say “We have submitted an ambitious proposal to transform the Councils whole front line service delivery model.” UNISON reps have had very limited access to any information on these proposals.

Capita shareholders clearly felt that the company will increase its profits with this deal as their share prices rose by 10% when the announcement was made. How exactly they will improve services and increase their profits has not been made clear.

We believe in Public Services fundamentally because they are democratically controlled. As Council employees our job is to deliver high quality services to the citizens of this city, not to make profits for multinational companies like Capita. Central Government have starved us of the money needed to provide world class services but to think services will improve when run by the private sector is we believe naive.

Services in Birmingham belong to us all, they are paid for by our taxes, should we really allow the City Council to just give away the family silver without a fight.

Points we raised with both Cabinet and Scrutiny Members.

During the BAFO stage of the negotiations the proposals for the Strategic Partnership changed dramatically from the original proposals. This in itself would not necessarily be a problem except that the suggested changes include setting up a joint vehicle company that is different to any other in the country. As it is a new and different model we feel more time should be spent looking at all the details, particularly concerning its role as an employer, but also in relation to its relationship to the Council and its power as a business in its own right.

In the Council press release Stephen Hughes comments that it is difficult at this stage to say exactly how much the city could make in savings but also quotes the figure of one billion pounds over the 10 year contract. The entire IT budget for this period is approximately half that amount and therefore it is unclear where these huge savings will be made. We understand that this process is not just about IT and future services will be looked at in their own right at a later stage. However we believe Cabinet were asked to make a decision based on the idea that huge efficiencies could be found without a clear picture of how this will be achieved. Could the things that are likely to make this type of saving be very politically sensitive in the future for example the selling off of Birmingham property assets? We have been given no idea how such savings can be made.

UNISON has asked for the BAFO responses so that we could put forward a more considered response for you to consider but we have not been given this information.

Although we have discussed the Secondment Model being proposed for the initial transfer of IT staff to the joint vehicle we remain unconvinced of its legality and have huge reservations about parts of the proposed model. Unless these concerns are resolved we will find it difficult to recommend this model to our members.

Throughout the negotiations we have been told that until the final contract is signed, we were led to believe this would be at the end of March 06, the decision of whether or not to enter into the partnership would remain open. There would be further negotiations, which we would be involved in before the final decision was made on the awarding of the contract. We were therefore shocked to see that Capita have already announced to the stock exchange that they will be the contractor leading to their share price rising by 10%. The information provided to the press makes it appear that the contract has already been awarded.

In the Report in the section entitled Evaluation of Alternative Options it states that consideration was given to the renewal of ICT contracts and one would assume keeping our ICT services in-house. We have offered to work with the city and employees to consider an alternative proposal that would include an in-house option but this option has never been made available to us. Our members in ICT have said very clearly to us that huge improvements and savings could be made in the long run with some initial investment in the service and the expertise certainly does exist in-house to make that happen it has simply never been seriously considered.

For many months now we have been requesting a proper picture of the baseline service as it currently stands so that we can assess whether the savings the bidders say they can make are real. This information has never been provided. Clearly one cannot assess if something will be more efficient if one does not have a comparison.

Our members have made it very clear to us that they thought IBM were by far the best bidder, although on the whole they wanted to be offered the opportunity to prove that they could submit an in-house proposal which would be better value for money.

We requested that the Council involve an external expert organisation to be a “critical friend” with experience of such contracts to support the process. Clearly both bidders are huge companies who are experts at presenting the “right” picture and saying the “right” things. We felt that a critical friend would have been an unbiased asset to the process. Unfortunately this was not done.