Agenda item
Options for Revenues and IT Delivery from 2011
This report summarises the outcome of an options appraisal for the provision of Revenue and IT services, following the expiry of the existing Capita contract on 30 April 2011. The current contract includes the collection of revenues for council tax and national non-domestic rates and the provision and maintenance of IT systems specific to both Revenue and Benefits services.
Minutes:
Margaret Read (Head of Revenue and Benefits) introduced the report which summarised the outcome of the options appraisal for Revenue and IT services as the existing Capita contract expires on 30 April 2011. The appraisal considered what type of model and vehicle delivery was desired. The three main options considered were:-
· Providing the service in-house
· Shared service with another council
· Re-tender of the contract with the same or a revised scope
A soft market targeting involving research to establish potential market interest in a Brent contract was undertaken as part of the assessing the re-tendering option. The Select Committee heard that it was difficult to establish the type of financial modelling required for a shared service option as there was no other London borough operating in this way to undertake a benchmarking exercise.
Margaret Read then drew Members’ to the various advantages and disadvantages of each option as set out in the report. She advised that it was felt that both the in-house and the re-tendering options offered potential to improve on the existing performance, however the in-house option was unlikely to be the most cost effective option. In addition, there was a risk of potential loss of key management and specialist support resources and the loss of shared risk incorporated in the current arrangements. There was also little prospect of developing a successful shared partnership with another local authority in the timescales available. Margaret Read advised that re-tendering of the service was perceived to provide the most cost effective and successful option if the specification included some or even all provision of customer service for revenues. Research had indicated that there was likely to be sufficient market interest to ensure that the Council secured a competitive procurement environment that would provide value for money. It was therefore recommended that the re-tendering option be pursued and that consideration be given to increasing the scope of the contract to provide customer service for Council Tax or a re-configuration of existing arrangements with the One Stop Service to increase effectiveness.
During discussion by Members, Councillor H B Patel commented that the shared service option did not seem to be a realistic one and there were value for money issues with the in-house option. He sought views regarding what Capita’s intentions were with regard to a possible future contract. Councillor Butt asked what the Council Tax collection rates were for London boroughs who provided the service in-house and suggested that an in-house arrangement would beneficial and staff could be transferred under TUPE arrangements. Councillor Mendoza sought views as to the potential of the three options to increase revenue from Council Tax and National Non-Domestic Rates (NNDR) collection.
The Chair enquired whether extending the scope and length of the contract would be more attractive to potential tenderers and if it was intended to add future clauses for under performance in the event of a contract being awarded to an external organisation. With regard to a change of contractor, the Chair asked what steps would be taken to ensure that knowledge and skills would be captured from the previous arrangement and would TUPE arrangements for those who had been CAPITA employees apply. He enquired what the next steps were with regard to pursuing the preferred option.
In reply, Margaret Read advised that any external contract sought would be on a five year basis with a three year extension, the same arrangement as the present contract. Of the eight organisations contacted with regard to the re-tender option, all had expressed a preference to control customer contact and it was felt that the existing arrangements were too constrained in respect of this. Members noted that clauses with regard to under-performance were already in place with the existing contract, with the ability to serve a default notice and such arrangements were likely to be pursued in any future agreement. Margaret Read advised that should an alternative contractor be chosen, it was likely that the Council would pursue TUPE arrangements to retain staff and the knowledge and skills base and that transitional arrangements would be in place in such circumstances. The Select Committee heard that Capita were keen to continue working with the Council and to address the constraints in the existing contract for any future arrangements.
Margaret Read commented that Council Tax collection of those boroughs that had in-house arrangements varied and because of the wide variety of demographics involved, it was difficult to make accurate comparisons with other models. She advised that an in-house service would be 5% more expensive overall and it would also require operating NNDR collection which currently benefitted from shared resources with Capita. In view that the shared risk element would also be lost, it was reiterated that outsourcing was clearly the more cost effective option. Margaret Read added that there was also concern as to whether IT would have the capacity to support the in-house option. Members noted that both in-house and tendering out options had the potential to improve Council Tax collection, but there was less risk involved with the latter. Margaret Read advised that a report was to be considered by the Executive in January 2010 recommending the re-tendering option, with the results of first stage of re-tendering reported in February 2010 and the awarding of the contract due in November/December 2010.
Duncan McLeod (Director of Finance and Corporate Resources) added that as there would be an IT link between Council Tax collection and Benefits with the in-house option, an IT failure in any area would mean the whole system going down.
The Chair requested that further information be provided to Members on the cost differentials between in-house costings and external costings, such as the in-house costs the Council would solely need to bear, and what the shared costs would be for the re-tendering option.
RESOLVED:-
that the report on Options for Revenues and IT Delivery from 2011 be noted.
Supporting documents:
- Revenue and IT delivery 2009version2, item 5. PDF 120 KB
- IT and Revenue delivery AppendixA, item 5. PDF 159 KB