The joint venture, 68 percent owned by Capita and 32 percent owned by Birmingham City Council, was called Service Birmingham. While the partnership is dissolved a partnership between the pair will remain in place until 2021.
The contract was condemned as being far too expensive at its peak in 2011, costing the council £120 million a year at a time of cuts. It currently costs £70 million a year.
Labour council leader John Clancy said the move would mean savings of £11.5 million this year and could save services like libraries, social care and parks from more cuts.
Before he became leader, Coun Clancy was a strong critic of the deal, which he called a “Rolls-Royce contract” in a time of austerity.
The council said that for a decade the partnership has successfully delivered significant savings. In a statement the council said: “To enable Capita to support the council’s further cost savings objectives we have jointly worked up a proposal to reshape our commercial arrangements to allow greater flexibility to better cater for the future needs of the Council and its residents.”
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.
“Discussions on the proposal are ongoing, and a report is expected to go to Birmingham City Council’s Cabinet for approval in due course.”
In the most recent report, for the 12 months ending 31 December, Service Birmingham reported a turnover of £86.6 million, down 12 per cent on the previous year.
The employee base of Service Birmingham is currently made up of staff from both Capita and the council, and Capita expects this to continue.
The leader of council John Clancy however told the Birmingham Post that he expects around 200 staff to be transferred back to the council.