LIVERPOOL Direct Ltd, the controversial one-stop-shop and IT joint venture deal between Liverpool City Council and telecoms giant BT, is to be scrapped within weeks.
BT’s 60pc stake in the multi-million pound operation is to be transferred to the city council which owned the other 40pc of the business. Council services will then move back in-house.
Behind-the-scenes talks have been going on for months, but the announcement only came out tonight on the eve of Mayor Anderson’s Cabinet Meeting on Friday morning.
Warrant
A statement issued from Dale Street claimed the reasons for the split were entirely down to government spending cuts imposed on the council.
The current £70m-a-year contract is currently due to end in 2017, but now it looks like the relationship will be severed by the end of this March.
Just last week Lancashire Police carried out a search under warrant of a property owned by LDL boss David McElhinney in an ongoing investigation into procurement irregularities at Lancashire County Council. It was reported that computers were removed from the address.
No mention was made of what will happen to McElhinney in his day job but it is understood there will be no job losses among LDL staff.
The statement from the council spoke in glowing terms of the relationship between the council and BT.
Mayor Anderson said: "We are very grateful to BT, not only for the investment they have made historically through LDL but, for their continued support to the city through the recently announced sponsorship of the International Festival of Business; the creation of 240 new jobs in the city to support the growth of high speed broadband services; and the renewed sponsorship of the Arena and Convention Centre.”
But there was no praise for LDL from the leader of the Lib Dem group on the city council, Richard Kemp. He welcomed the “belated” move to seek to abolish Liverpool Direct Limited, saying it was an organisation that has grown out of control over the past few years.
Cllr Kemp said “There are big questions to be answered about the way LDL has been run for the last three and a half years: where the money has been spent and whether full probity was conducted in the agreement with Lancashire County Council, Liverpool City Council and British Telecom.
Dave“We need to know whether any pay-offs have been made to staff involved in the BT/One Connect Limited contract and if BT agreed to this move. We also need to know if there is any contractual pay off to BT.”
He added: “We now urgently need to look at the functions/jobs undertaken by LDL to incorporate them into council activity.
“The LDL brand now is heavily toxic so all outward facing signs of LDL should be removed immediately by Council.”
LDL currently provides a range of services for the city council as part of a partnership created in 2001. These include HR and payroll; IT and web services; customer access; and revenue and benefits services.
Mayor Anderson said BT and Liverpool City Council have enjoyed a long and successful partnership through LDL, bringing commercial expertise, transforming services and bringing in resources to the city.
The Mayor added: “LDL has created over 300 jobs and generated multi-million pounds worth of savings since July 2001, as well as bringing in around £90m investment and avoidable costs for the residents of the city and the city region.
“This transformation has only been achievable due to the sustained collaborative working between BT and their respective teams of staff. However, as part of our three-year budget strategy – to find £156m savings following government funding reductions – we are reviewing all services. I believe it is now time to move LDL in a new direction.”
BT has told the council it is unable to offer any further savings above the millions of pounds already cut from the contract.
The council’s chief executive, Ged Fitzgerald, says in a report to members of the council cabinet: “BT feels unable to commit to any further price reduction within the contract as they need to sustain their own financial position.
Ged“Moreover, the city council is now well placed, as a result of the long collaboration with BT and the learning gained from the Partnership, to continue to drive forward business transformation and run the services with consequent cost savings to the city.”
Mr Fitzgerald will now take a place on the board of Liverpool Direct in its reincarnation as a wholly-owned arm of the city council.
Neil Rogers, Chairman of LDL and President, Global Government for BT Global Services, said: "Both BT and LCC agree that now is the right time to set a new direction for the relationship between us. LDL has had great success and was groundbreaking in its day but BT is working with LCC to agree whether a different approach would better help the City meet the increasing challenge it faces.”
