Liverpool City Council is to cancel a £70m-a-year IT joint venture deal with BT and bring services back in-house.
According to a report in the Liverpool Echo, the council is looking to exit the deal despite agreeing to keep the agreement until 2017 just three years ago.
The joint venture known as Liverpool Direct, which is 60% owned by BT, could be brought in-house. The joint venture began in 2001.
According to the report the decision to bring services in-house is because BT would not agree to cutting the cost of the services further. Services provided through the joint venture include call centres, payroll and benefits.
A report going before the council’s cabinet will state: “Unfortunately BT feels unable to commit to any further price reduction within the contract as the need to sustain their own financial position.
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“Moreover the city council is now well placed as a result of the long collaboration with BT and the learning gained from the partnership to continue to drive forward business transformation and run the services with consequent cost savings for the city.
“In discussions in December 2013 both parties negotiated and agreed in principle to consider the proposed transfer of ownership of Liverpool Direct to the council which would mean the early cessation of the contract by mutual consent.
"This would mean Liverpool Direct would become a wholly-owned subsidiary of the council.”
The controversy surrounding some joint ventures has led to mutuals being touted as a new model for the public sector, with the hope of improving productivity by transferring ownership to employees.
Mutuals have been described as a kind of joint venture, where another party puts money in for investment and the body is run by the previous public sector staff who worked for the organisation. For example, the pension service MyCSP, which was mutualised last year, received funding from employee benefits company Xafinity.