Birmingham City Council has agreed to a £300m contract extension to its Service Birmingham joint venture with Capita.
Service Birmingham will now also deliver the council’s revenues service for a period of 10 years from April 2011.
The extension is expected to save the council £55m over the life of the contract, in addition to the £69m in savings already delivered.
Randal Brew, councillor at Birmingham City Council, said, "At a time when we are facing an unprecedented financial challenge, we need to focus on driving efficiencies and getting value for money. This deal represents an excellent opportunity to achieve both."
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Paul Pindar, chief executive of Capita, said the company was delighted that Birmingham City Council has agreed to extend this contract.
Under the contract, 152 council revenues staff will transfer to Service Birmingham under TUPE regulations.
In September Birmingham City Council began assessing open source software as part of a £330m cost-cutting programme.