Lancashire County Council’s leader Jennifer Mein heralded “a really good news day” for staff, service users and taxpayers after bringing about the end of One Connect Limited.
The authority confirmed sweeping changes to its strategic partnership with BT after a cabinet meeting yesterday.
One Connect Limited (OCL) was set up by the previous Tory administration and BT in May 2011 to run various County Hall functions, with the aim of saving the council around £400m over 10 years.
It has around 800 staff seconded from LCC and BT, with a 40 per cent shareholding held by LCC and 60 per cent by BT.
Now OCL is to become a wholly owned BT company, renamed as BT Lancashire Services Limited (BT LSL).
The majority of OCL functions, like welfare rights, human resources and crucially, procurement, will return to being delivered in-house by the council.
Meanwhile, BT will continue being responsible for the county’s IT and payroll, and West Lancashire Council’s revenue and benefits services.
Coun Mein said: “OCL was a big area of concern following the debacle with the fleet services contract and the telecare contract and the fact there had been guaranteed savings of £5m a year from procurement, which have never materialised.
“Our partnership with BT is carrying on for the same duration, a further seven years, with an option to add another five years at the end of it. However, as part of this agreement, there is also an option for either side to step away at any time.”
The Labour group said it couldn’t yet put a figure on the total savings the revised partnership would deliver.
Coun Mein said: “Obviously the £400m that was projected was totally unrealistic - events have proven that.”
Hundreds of council staff seconded to OCL will return to the council, with the remainder continuing their secondments as part of the slimmed down partnership. The changes will take effect from March 31.
As BT LSL will be wholly owned by BT, the partnership’s governance will no longer involve a joint board of directors. Instead, senior figures from both parties will regularly review its progress every three months.
Former council leader Geoff Driver branded the move “madness”.
He said: “I am sure everyone will be amazed to see that after months of accusing the Conservatives of ‘outsourcing’ council services by seconding council staff to a joint venture between LCC and BT, the Labour administration is actually seconding staff to a company that is wholly owned by BT and in which the county council has absolutely no involvement.
“That is more than ‘outsourcing’, it is privatisation, no more no less. So not only have Labour allowed their political vindictiveness to cost Lancashire taxpayers millions, they have demonstrated a total disregard for the future wellbeing and welfare of their staff.
“Under the OCL arrangements, LCC was contractually guaranteed at least £10m savings every year and the county council had three directors on the board. They have foregone those savings and LCC will have absolutely no say in how the new company will be run. This is madness.”
However, Coun Mein said Coun Driver’s claim was “preposterous”.
She said: “The people working there will still be LCC staff and unlike in the previous arrangement, LCC will have total oversight.
“They will have the same terms and conditions as anybody working directly for LCC and they will have the same rights and access to VR and access to trade union support.
“If OCL had been working why did we get to this sad, sorry state of affairs, when BT and ourselves both agreed that OCL was not performing as it should?”
Deputy leader David Borrow added: “We have a duty of care in our bilateral agreement because it’s a clear, client/contractor relationship, as opposed to the mix we had with a joint board.
“In the previous arrangement there was some confusion as to the council’s role in looking after its own staff working for a joint partnership.”
They said the deal had taken place without any compensation being paid by either party.
Coun Borrow said: “It’s very unusual for a local authority ending this sort of relationship and moving on without paying compensation.”
Coun Mein added: “That says a lot about the senior people at BT and their understanding of what wasn’t working.”
Tony Chanmugam, chairman of OCL and BT Group chief finance officer, said it was “a key milestone” in its relationship with the council and that BT looked forward to the relationship “going from strength to strength”.
Meanwhile, Liberal Democrat group leader Bill Winlow said he was “absolutely delighted” with the outcome.
He said: “Our officers have done us proud. They worked extremely hard to get this agreement.
“There has been no compensation paid in either direction - that is absolutely clear.
“This is what we hoped for, this is what we’ve got - now let’s move on.”