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Lambeth adds £60m to Capita outsourcing contract

Deal offers shared services but will other authorities take interest?

The London Borough of Lambeth is set to expand an outsourcing deal with Capita, taking its value to £60 million over 10 years.

Lambeth has selected Capita as preferred bidder for work covering a range of services including the existing revenue collection contract, as well as management of the Council's call centre operations, IT support services and a "benefits resilience" service.

The main aims of the deal are to improve interaction with citizens, while saving a projected £10 million over the contract life, and generating an additional £5 million in council tax revenue. Since the original contract commenced in 1997, council tax collection rates have gone up form 79 perent to 95 percent.Capita will invest £6.5 million in the creation of new technology over the course of the contract.

Lambeth has the opportunity to widen the scope of the deal in order to include delivering shared services with other councils, potentially taking its value anywhere up to £300 million if this option is exercised. The deal also has an optional five year extension clause.

Georgina O'Toole, director at analyst house TechMarketView, said the Lambeth was unlikely to take up the shared services option. Despite a lot of noise in the market, progress in shared services remained slow across the public sector. "Our analysis of the local government market would indicate that the sharing of services is by no means guaranteed," she said.

Last month, local council IT managers' association Socitm called for councils to make more use of shared services.

"We are determined to make the whole experience of contacting the Council easier and as hassle free as possible," said Councillor Paul McGlone, Lambeth cabinet member for finance.

McGlone added that the service model proposed by Capita "is flexible and scalable over time, meaning it is 'future proofed' for changes in the way people communicate with us".

"This will lead to a much improved experience when people contact us to pay their council tax, inquire about their benefits, find out about a service or report a problem," he said.


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