Experts have warned that Liverpool City Council risks biting off
more than it can chew with its plans to create a pioneering new
company to help run a range of services, including IT, for other
local authorities.
Anthony Miller, an analyst at Ovum Holway, said, "Local authorities
have enough on their plates looking after their residents, without
having to run a commercial IT services business." It should leave
that to the experts, he added.
The company, called NewCo, would see Liverpool council running call
centres for other local authorities, as well as potentially
offering consultancy services.
NewCo, which builds on the council's existing joint venture with
BT, is believed to be unique in local government. The council will
have a controlling 51% stake in the new company, while partners BT
and Enterprise will each be offered a 10% stake in return for an
investment of £250,000.
Council officials claim there will be no cost to taxpayers in
creating NewCo and estimate that the company will generate millions
of pounds of extra income for Liverpool council, while at the same
time creating hundreds of jobs.
The council believes that its in-house expertise will be key to the
success of NewCo. A spokesman said, "We can share the skills that
we have acquired in setting up some of the most advanced IT systems
in the UKpublic sector, so that other local authorities don't have
to re-invent the wheel."
However, Miller said the council will face stiff competition in a
market already packed with IT services companies. "It will put it
in direct competition with other established IT services
players.This is a completely different world and it is not one that
local authorities were set up to do," he said.
"Offering services to other local authorities is well-intentioned,
but from a pragmatic point of view it will be fraught with
problems, both technical and, in particular, political."