Cross-council IT merger puts 170 Devon jobs at risk
Four Westcountry councils are targeting an ambitious plan to merge their IT services and systems which, it is claimed, could save the public purse £16 million over 10 years.
Plymouth City Council is working with East Devon District Council, Exeter City Council and Teignbridge District Council to create a new "joint venture company" to integrate their technology.
First steps towards that goal, which would affect 170 staff at the authorities, have already been approved by Plymouth, Exeter and East Devon while councillors at Teignbridge will discuss the matter later today.
An initial £85,000 is needed from the four authorities to produce a full business case, which is expected in June.
If agreed, the set-up costs of the new company, which would be solely owned and controlled by the councils, is estimated at £1.2 million with the money being recouped within two years.
Plymouth City Council's deputy leader, Peter Smith, said: "When all councils are faced with making similar budget cuts it makes sense to look at options where we can deliver back-office services together. Shared services is an option we are looking into which could potentially save money which could otherwise be needed in other areas such as services for vulnerable adults and children."
In the next financial year, the quartet will spend some £11.8 million on IT services. The working title for the new company is Delt – the Danish word for shared – Service Limited. While some of the 170 current staff jobs could be put at risk, a report to the city council's cabinet said there were other areas where greater savings could be made.
"The exciting aspect of this shared service proposal is that over 50% of the current costs are used for supplies and services/contract spend rather than predominately from employee expenditure, which is usual in most local authority back office functions," it said.
"The major benefit of this is that by joining together it will open up a far greater opportunity than was previously thought in driving through savings by contract negotiation and system consolidation. There is a much greater potential therefore to generate savings outside of employee spend."
Unions though have cautioned against over-optimism with Nigel Costley, secretary of the South West TUC, pointing to the example of the public-private partnership Southwest One in Somerset.
It was set up in 2007 between Somerset County Council, Avon and Somerset Police, Taunton Deane Borough Council and IBM to provide backroom services. But in its first five years, it had only saved £10 million of the £50 million originally projected.
"The experience in Somerset has not been good and elsewhere it has been mixed," Mr Costley said. "Unions will be negotiating with each of the authorities not just to make sure employment is secure but primarily to ensure the public service they deliver is maintained."