South West One shared service venture is failing, says Somerset council leader

Somerset's council leader has publicly condemned its South West One joint venture with IBM as a failure.

Somerset's council leader has publicly condemned its South West One joint venture with IBM as a failure.

Ken Maddocks made the statement to a full meeting of Somerset County Council today. Somerset is meanwhile in the middle of contract renegotiations with the loss-making public-private partnership it struck with IBM and two other public authorities in 2007.

Maddocks said he inherited the problems at South West One (SW1) from the last, Libdem-run, council. He said SW1 had made "staggering losses" and yet delivered little of the savings it had originally promised for councils who joined the venture.

"We have bent over backwards to try to make this partnership get the best possible value for the public’s money. I have to say that South West One is failing this test," Maddocks told councillors.

He said the venture, which was a flagship for outsourced shared services when it was launched, had also failed to provide the best possible services.

"Sadly, South West One is failing. It is failing to deliver promised savings; failing to cope with a changing financial landscape; failing to be flexible enough to adapt in challenging times and provide the best possible value for money," said Maddocks.

The council leader, a Conservative councillor, said he would deal with the problem by putting more effort into a review of council services with a view to doing more outsourcing deals.

"Almost half our most vital services are carried out by private sector or not-for-profit organisations – we will look to increase this where appropriate," he said.

He did not deliver the winding-up order that some observers had been anticipating. He said the council was still committed to making South West One work.

"But I have to be clear - it is failing; it is inflexible; and it is intransigent. We are therefore looking at all the options available to us," he said.

Maddocks said the failure should not be blamed on staff seconded and transferred to South West One by Somerset Council, Taunton Deane District Council and Avon & Somerset Police Authority in 2007. It should be blamed on "the contract, the complications, the failed technology," he said.

IBM's implementation of SAP at its majority-owned SW1 venture has been credited with problems at the site. It was established controversially in a hurry, while the deal's details have been shrouded in secrecy and attracted unsubstantiated allegations of corruption.

Participating councils and SW1 itself claim the economic downturn made the venture unprofitable. 

SW1 said in a written statement it had delivered £15m of savings to participating authorities and had identified another £71m it might save in the future. It said the venture had been noted for its efficiency in collecting council tax, had delivered a fibre-optic network to schools, had been commended for its contact centre and benefits service and created 200 jobs.

"South West One’s achievements to date have been against a backdrop of some of the most challenging economic conditions in recent times," said Jill Sillifant, SW1 director of relationship management, in the statement. 

The organisation said its operating loss was a consequence of public sector cuts, but financial troubles had not affected service levels.

"There has been no impact on residents’ council tax or client service levels as a consequence of these financial results.  South West One believes it is now well positioned to deliver further savings and further service improvements, to the benefit not just of the partner authorities, but also the wider communities in the south-west region,” said the statement.   

IBM was unavailable for comment.

IBM recently bailed SW1 out of its troubles with a £10m loan, while the joint venture's managers tore up the business plan and front-loaded its debts in an attempt to revive its fortunes.

Read more on IT for government and public sector