Council turns down ?2m O8 grant
Nov 21 2008 by David Bartlett, Liverpool Daily Post

The flag flies at half mast over Liverpool Town Hall (158)

LIVERPOOL City Council has turned down ?2m in additional sponsorship for Capital of Culture to avoid being further constrained by a controversial joint venture.

Talks over the extra cash from BT, that was to be given through the ?70m-a-year Liverpool Direct Limited partnership, have been ?terminated?, council chief executive Colin Hilton has told councillors.

Last night, the council claimed the ?2m was ?always going to be additional money?, insisting the decision would have no impact on the programme or budget of the Culture Company.

A specialist is investigating whether the council is getting good value for money out of the deal, after a local government agency raised concerns the deal was ?opaque? and highlighted a ?lack of transparency?.

The investigation is due to conclude by March, but the council turning down the ?2m sponsorship is the first evidence of the review taking effect.

In June, the Daily Post revealed the contents of a confidential report by the Improvement and Development Agency for Local Government (IDEA), which called for an urgent review into the contract.

A source said there was now a recognition in the council the deal may not have been working as well as possible for the authority, and ?pressure? was now being put on BT to improve the contract.

Last night, opposition Labour leader Cllr Joe Anderson said he still did not know whether the council was getting value for money from the contract. He said he would be seeking a meeting with executives from LDL and also Colin Hilton to request more information.

LDL was set up as a joint venture with BT in 2001 to improve the council?s customer services department.

It has since expanded its remit into other areas of the authority including information technology, human resources, and revenues and benefits.

In March, the Daily Post reported how BT had agreed to double its sponsorship of the Culture Company from ?2m to ?4m, but said the new ?2m had to be repaid if the council terminates its contract early.

It was part of the council?s ?Plan B? to set a balanced budget after the Government said the authority was not allowed to sell assets to fill a ?20m hole in Culture Year finances.

The contract with LDL runs until 2017, and the IDEA warned that terminating it early could cost ?20m, but nonetheless should be reviewed.

It stated: ?If the review demonstrates that there is still value for money to be obtained from this contract, it should be renegotiated with British Telecom.Should these negotiations fail to deliver to the expectations of the council, then it should be in a position to go to the market, which has moved on significantly since the original partnership with BT to ensure value for money is achieved.

?At that time, Liverpool will need to have a clear understanding of the potential benefits the market can bring to weigh against the financial penalties for withdrawal.?

Cllr Anderson said: ?Without seeing the details of the contract, we can?t really say whether the council is getting value for money.

?The ?2m was a deal very much cloaked in secrecy when people were asking questions about Capital of Culture spending.?

His deputy, Cllr Paul Brant, said the review of LDL services would now be watched with more interest.

A city council spokesman said: ?We recently extended our partnership with Liverpool Direct Limited, and, as with any large contract, it is constantly being modified and developed to reflect the changing needs of the council.

?We are looking at a number of ways to update the services provided by LDL, and the ?2m sponsorship was one possible option arising out of these changes.

?Our review is well advanced, but we have agreed these changes should be finalised as part of our standard contract negotiations and not mixed up with the financing of Capital of Culture.?

He added that the sponsorship already being provided by BT/LDL was unaffected by this decision.