Birmingham City Council is to end its much-maligned ICT joint venture in a move that it says could save £43m.
Council leader John Clancy this week announced that the contract will end by March 2018 — three years early.
The joint venture — named Service Birmingham — was started in 2006 and extended in 2010, covering ICT, contact centre and revenue services.
Clancy told the Birmingham Post: “I made it clear upon becoming council leader we could not continue to spend a vast amount of money on ICT given the tough decisions that have to be taken about cutting spending in other departments.
“This agreement means that Birmingham City Council will have more to spend on frontline services and to deliver key policy priority pledges on inclusive growth, housing and social services.”
He said that around 200 Capita employees would transfer to the city council and that future ICT projects will be put out to the market.
The Service Birmingham deal has been roundly criticised over its lifetime over costs.
In 2012, a report by accounting firm Grant Thornton recommended that the council should renegotiate the contract to ensure payments are based on performance rather than call volume.
In 2014, the deal with Capita was reshaped to save £150m a year.
A spokesman for the joint venture said that the partnership had delivered significant savings over the past 10 years, and added that many services under the contract would continue to be delivered by Capita.
The statement said: “The proposal, although keeping the core services contract in place until 2021, allows for the joint venture arrangement, which has some commercial restrictions, to be dissolved.
“The new partnership will deliver a mix of core services currently provided under Service Birmingham as well as additional project-based work enabling additional savings to be delivered over the next four years, helping the council to meet its objectives.
“This next phase of work is focused on Capita implementing the council’s ICT & Digital strategy 2016-2021 which will meet the needs of modern public services and enable citizens, business and other partners to be better connected across multiple channels.”
A report on changes to the contract is due to go to the council’s cabinet for approval “in due course”.