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Axe falls on 'toxic' Liverpool Direct deal

Mayor cites spending cuts for sudden split with BT. City services to return in-house

Published on February 27th 2014.


Axe falls on 'toxic' Liverpool Direct deal
 

LIVERPOOL Direct Ltd, the controversial one-stop-shop and IT joint venture deal between Liverpool City Council and telecoms giant BT, is to be scrapped within weeks.

BT’s 60pc stake in the multi-million pound operation is to be transferred to the city council which owned the other 40pc of the business. Council services will then move back in-house.

Behind-the-scenes talks have been going on for months, but the announcement only came out tonight on the eve of Mayor Anderson’s Cabinet Meeting on Friday morning. 

Warrant

A statement issued from Dale Street claimed the reasons for the split were entirely down to government spending cuts imposed on the council. 

The current £70m-a-year contract is currently due to end in 2017, but now it looks like the relationship will be severed by the end of this March. 

Just last week Lancashire Police carried out a search under warrant of a property owned by LDL boss David McElhinney in an ongoing investigation into procurement irregularities at Lancashire County Council. It was reported that computers were removed from the address. 

No mention was made of what will happen to McElhinney in his day job but it is understood there will be no job losses among LDL staff. 

The statement from the council spoke in glowing terms of the relationship between the council and BT. 

Mayor Anderson said: "We are very grateful to BT, not only for the investment they have made historically through LDL but, for their continued support to the city through the recently announced sponsorship of the International Festival of Business; the creation of 240 new jobs in the city to support the growth of high speed broadband services; and the renewed sponsorship of the Arena and Convention Centre.” 

But there was no praise for LDL from the leader of the Lib Dem group on the city council, Richard Kemp. He welcomed the “belated” move to seek to abolish Liverpool Direct Limited, saying it was an organisation that has grown out of control over the past few years. 

Cllr Kemp said   “There are big questions to be answered about the way LDL has been run for the last three and a half years: where the money has been spent and whether full probity was conducted in the agreement with Lancashire County Council, Liverpool City Council and British Telecom. 

DaveDave“We need to know whether any pay-offs have been made to staff involved in the BT/One Connect Limited contract and if BT agreed to this move.  We also need to know if there is any contractual pay off to BT.” 

He added:  “We now urgently need to look at the functions/jobs undertaken by LDL to incorporate them into council activity.   

“The LDL brand now is heavily toxic so all outward facing signs of LDL should be removed immediately by Council.” 

LDL currently provides a range of services for the city council as part of a partnership created in 2001. These include HR and payroll; IT and web services; customer access; and revenue and benefits services. 

Mayor Anderson said BT and Liverpool City Council have enjoyed a long and successful partnership through LDL, bringing commercial expertise, transforming services and bringing in resources to the city. 

The Mayor added: “LDL has created over 300 jobs and generated multi-million pounds worth of savings since July 2001, as well as bringing in around £90m investment and avoidable costs for the residents of the city and the city region. 

“This transformation has only been achievable due to the sustained collaborative working between BT and their respective teams of staff. However, as part of our three-year budget strategy – to find £156m savings following government funding reductions – we are reviewing all services. I believe it is now time to move LDL in a new direction.” 

BT has told the council it is unable to offer any further savings above the millions of pounds already cut from the contract. 

The council’s chief executive, Ged Fitzgerald, says in a report to members of the council cabinet: “BT feels unable to commit to any further price reduction within the contract as they need to sustain their own financial position. 

GedGed“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 to the city.” 

Mr Fitzgerald will now take a place on the board of Liverpool Direct in its reincarnation as a wholly-owned arm of the city council. 

Neil Rogers, Chairman of LDL and President, Global Government for BT Global Services, said: "Both BT and LCC agree that now is the right time to set a new direction for the relationship between us. LDL has had great success and was groundbreaking in its day but BT is working with LCC to agree whether a different approach would better help the City meet the increasing challenge it faces.”

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13 comments so far, continue the conversation, write a comment.

Katie54February 28th 2014.

Fitzgerald is already on the board of LDL - and has been since 2011. So, of course, has Joe Anderson (and the singularly useless Liam Fogarty).

Yaffle ChucklebuttyFebruary 28th 2014.

Katie54 You have done sterling work in your continued efforts to raise awareness around this relationship, as opposed to Dr McElhinney who has had maintained relationship in his effort to continue to raise more sterling. But to be fair to Foghorn Leggarty, he's probably been gagged, tied up and locked in the Venture Place shower. Anyway, I am sure there will be revelations to come. Nobody is going to believe the coincidental timing and spin put on this.

5 Responses: Reply To This...
Katie54February 28th 2014.

Thanks.... but surely whatever they did to Fogarty, we are entitled to demand some kind of explanation, aren't we? Anderson appointed him because he was runner up in the Mayoral election, and this somehow gave him some kind of democratic mandate (!!). But no provision was ever made for him to account for himself to anyone. He gets an allowance (only 10k a year, to be fair) to be an independent director. Which should mean what it says. And then say on the board for two years and didn't say a word about anything to anyone. It's not as if he's shy, is it??

John BradleyFebruary 28th 2014.

Fogarty was put on because he had always questioned LDL, he did come second. It is not his placement that is the problem, it is his silence. Now will someone tell me what the fuck is going on with Ged Gibbons? The ball started rolling on all this council LDL, Quango stuff with his disappearance.

Katie54February 28th 2014.

Forgive my ignorance, but could you please explain who Ged Gibbons is?

helpfulFebruary 28th 2014.

Here's a video LC did of him having it out with the buskers www.liverpoolconfidential.co.uk/…/Ged-Gibbons-v-Johnny-Walker…

AnonymousFebruary 28th 2014.

£10k a year for popping along to a meeting now and then can probably make you a bit shy. Then there's all the perks. A set of cufflinks, a miniature fluffy blue gonk with eyes that wobble when you shake it.

Liam FogartyFebruary 28th 2014.

Folks - a couple of points. This "£10k" allowance is news to me. I have made no claims for allowances or expenses AT ALL during my stint on the LDL board. That was always the deal and that was fine by me. And I was never offered cufflinks or a "gonk" either. I accepted Mayor Anderson's invitation to take up a non-executive role on the re-constituted board of LDL in 2012. Having been a critic of the company ( though not remotely as tenacious or effective a critic as katie 54 has been ) it would have been churlish of me not to. The Mayor's offer to me was made - and accepted - in good faith. The statutory obligations imposed upon "non-execs" meant I was never going to be able to leak against, sound off about or otherwise undermine the company from within. I knew that from the outset. I am sorry if that disappoints some of you who've posted above. But I did - with others - try to make a positive difference in the governance and performance of LDL from a position on the board. LDL's imminent demise means , of course, that I'll be denied the chance to stage the spectacular public strop or angry resignation for which I have long secretly yearned. But I can live with that. Liam F

2 Responses: Reply To This...
Katie54March 1st 2014.

Liam, apologies for the remark about the allowance. It was based on the following statement in the LDL annual accounts for 2012/13. "With the exception of the non-executive directors (non-executive directors are directors of the Company who are not employees of British Telecommunications plc or employees or elected members of Liverpool City Council), the directors of the Company have not received from the Company any remuneration or expenses in their capacity as a director of the Company. " However, the other non-exec is a retired BT guy, so I should have paid a bit more attention to the next bit: We confirm that the directors' remuneration paid by British Telecommunications plc on behalf of the Company to one non-executive director during the year is £8,400." I assumed this was for you (since the other guy will already be receiving a BT pension). On the question of your duty of confidentiality, this is not a statutory duty. All directors are appointed to represent the shareholders, as a whole, and your statutory duties are concerned with more fundamental stuff - acting within your powers and promoting the success of the company (as a whole, not just that of one shareholder) ,etc etc. You could and can whistle-blow - as a director, you have indemnity insurance. Annual accounts that do not include any income at all for all the third party work, and no real information on expenses etc. are hardly in the interests of the company as a whole, because it results in no assets and zero profits, year after year. Where is all the much-touted investment?We don't even know who paid for all the equipment, fixtures and fittings, or who owns them? Who did the third party clients actually pay? You are and were aware of the provisions of the JVA and contract and also aware of this puzzle about third party work. To take just one example, throughout the time you have been a director LDL has been working for the SIA, a Home Office quango, which has been paying multiple millions for this service since 2006. This is mentioned in a National Audit Office report (on the SIA), in parliament (Hansard) and in the Leveson enquiry documentation. There are many more third party clients, as you know. Omitting all this from the accounts is hardly in the interests of the company, so how on earth could you sign a statement that the accounts provide a "true and fair view" of the business of the Company? Finally, I didn't think LDL's demise was actually imminent - the proposal is for it to become a wholly owned subsidiary of the Council. Buying out BT, presumably. This should mean that the Company records transfer too. Please do whatever you can to make sure it happens.

Katie54March 1st 2014.

Sorry about the massive length of the above. The separate paragraphs seem to have disappeared.

Frank JonesFebruary 28th 2014.

Joe Anderson stated before the 2010 election, how he was going to get BT to pay the moneys owed to the council (sham) settled for less.Call me cynical 2 years left on contract and walk away, Richard Kemps party created the monster in 2001,also what happened to the report that was commissioned by the then leader of the council and now mayor. Frank Jones Independent Candidate Princes Park Ward local election 2014 Community Engagement.

Kenneth AspinallFebruary 28th 2014.

Chickens coming home to roost. The people of Liverpool have been robbed blind by LDL ever since its inception. Questions have been asked and continue to be asked about the cosy relationship between council officials and LDL. Reports into maladministration have been suppressed. Is it a coincidence that this has come about after Lancashire County Council blowing LDL out after a very short relationship and binning their Chief Executive over dubious fleet maintenance contracts with BT/LDL. Not to mention the fact that the Chief Executive of Lancashire County Council was paid off by Liverpool City Council, turns up at Lancashire County Council and immediately enters into a contract with mates at Liverpool City Council? Then houses connected to Halsall and McLhinney raided by Police - whats goinf on? Liverpool City Council forced into getting shut of LDL because of the cuts, land of milk and honey has dried up. Rats leaving the sinking ship, snouts out of the trough boys. Shame on all involved! Hang your heads in shame.!

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