ESSEX County Council has signed a pioneering deal with IBM worth up to £5.4 billion to manage and provide public services.
The eight-year deal between the technology giant and Essex County Council is expected to transform the way that public services are provided across the county and save 20 per cent of the authority’s annual £1.2 billion budget within three years.
The contract is being widely seen as a model for local government under a Cameron adminstration and has the enthusiastic backing of Eric Pickles, the Tory party chairman.
Other Conservative authorities such as Hammersmith & Fulham, and Barnet, are also slashing costs by privatising and outsourcing services.
Unions have warned that the Essex deal, the largest of its kind in Britain, could result in thousands of job losses as services are merged and workers are replaced by technology.
The deal, negotiated over the past 12 months by Lord Hanningfield, the leader of Essex County Council will cover almost all the authority’s services, including schools management, social care, highways and libraries in stages.
IBM’s first task is to review the £800 million of services that have already been contracted out to see if further efficiencies can be made or if contracts need to be revised.
Where the town hall is more efficient it will sell its services to other districts and other parts of the public sector, including primary care trusts and schools. In other cases Essex will buy in services from other parts of the public sector.
Lord Hanningfield told The Times that IBM was chosen, in part, because of the company’s experience in Canada where it saved “billions of dollars” by streamlining government services.
The company set up a one-stop shop where customers could go to one website to get information on all government services, file tax returns, pay vehicle licences and claim benefits. “Working together we will be able to keep council tax low and deliver real value for money for Essex residents,” said Lord Hanningfield. The focus would be as much on outcomes as saving money, he added. “In future we won’t be specifying how a pothole is repaired but we will insist that there are no more potholes in that road for five years.”
The unions have complained that they are not being fully consulted on the details and figures on job losses have been drawn up yet. Dave Prentis, the general secretary of Unison, said that the track record of outsourcing in local government was littered with failures that were both inflexible and costly to alter.
“The pressure to extract profits and make dividends to shareholders leads to costcutting at the expense of investment and service quality,” he said.