Liverpool Council expects to save £30 million by ending ICT joint venture with BT

Liverpool Council expects to save £30 million over the next three years by terminating its controversial ICT joint venture with BT at the end of this month, according to an official council report.

The move comes as BT refused to significantly reduce the price of the contract despite a leaked report in 2010 showing that the telecoms company had been “excessively marking up” the cost of equipment by about £10 million a year. BT said it believed the report was “based on incorrect assumptions and generally inaccurate.”

BT will hand back its 60 percent share of the Liverpool Direct Limited (LDL) joint venture, which provides call centre, benefits and ICT services to the council.

The council will assume full ownership of the company on 31 October, according to a report due to be discussed by cabinet members on Friday.

The decision to terminate the joint venture was made in February after BT refused to offer price reductions of more than £5 million a year on the £70 million-a-year contract during discussions with the council in autumn 2013.

“BT feels unable to commit to any further price reduction within the contract as they need to sustain their own financial position,” a council report published in February said.

The negotiations were part of a wider drive by the council to find savings to help close a budget gap of £156.8 million between February 2014 and March 2017.

The agreement to create the joint venture company was signed in 2001. The contract was due to run until March 2012 but the two parties agreed to extend it to 2017 in 2006, after negotiating price discounts of £18 million and an investment of £41 million by BT over its remaining lifetime.

Copyright © 2014 IDG Communications, Inc.

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