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Death of Liverpool Direct looms - but boss McIlhenny stays on for another year

'It will take some time to wind up the company'

Published on October 17th 2014.


Death of Liverpool Direct looms - but boss McIlhenny stays on for another year
 

LIVERPOOL Direct, the city council’s front-line service, will switch to full council ownership on October 31.

But its chief executive, David McElhinney, will be kept on for almost a year to oversee the "wind up" before he is made redundant.
 
A report to next Friday’s cabinet meeting says the council will save £30m over the next three years by scrapping the joint venture it currently runs with BT.
 
In December, 2013, the council and BT mutually agreed to close down the partnership and transfer ownership of LDL to Liverpool City Council. 
 
Negotiations have now been successfully concluded over a six-month period enabling the transfer of ownership of LDL to the city council. 
 
The report to the cabinet says that by March 31, 2015 it is intended, operationally, that Liverpool Direct Limited will cease to function as a wholly owned subsidiary operation.
 
 “It  will take some time to ‘wind up’ the company," it says. "This is forecast to be completed by the 30 September 2015. The Chief Executive of LDL (David McElhinney) will remain in post until the company ceases to operate. The costs of the Chief Executive post will be charged to LDL until the point when the post will be disestablished alongside the cessation of operations around March 2015. Further rationalisation of the LDL management team will take place in line with the transition of services to Liverpool  City Council.”

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The first step in this process has already occurred with the integration of the Revenue and Benefits Service under a single assistant director post. It is envisaged that other senior management roles will also be disestablished as the transition unfolds. 
 
A small team will continue to operate until the 30 September 2015 to  complete the close down of LDL.
 
Liverpool Direct was established as a joint venture with BT in 2001, but it has been surrounded by controversy, largely over its costs.
 
As part of the deal, the city council was entitled to a share of income earned from third-party work generated by LDL.  
Since then, almost £59m has been earned for third party work, but the council’s cut has amounted to an income of just £1.54m, a slice of just 1.9 percent which is in accordance with the partnership agreement. This windfall income has been invested by the council in a number of projects, including the provision of e-libraries and the Benefits Maximisation Service which helps to ensure that vulnerable people have full access to the welfare benefits that they are entitled to. 
 
Mayor Anderson said “LDL has successfully delivered services and service improvement throughout its life.  The relationship with BT has been central to this success.
 
“We are grateful that BT remains committed to serving residents and businesses in Liverpool but it is timely, given the continued financial climate for LDL, to move in a new direction to become fully integrated into Liverpool City Council.”

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Katie54October 20th 2014.

The ludicrous 1.9% is indeed in the partnership agreement, but the actual joint venture agreement and contract trump this, legally. The £59 million did not go through the books, and it should have done. If it had, the council, as part-owner of the company, would have benefited a lot more. There's a lot more information on all this in the comments to Friday's article in the Echo (www.liverpoolecho.co.uk/…/liverpool-council-save-30m-over-7949750…). But there is another reason why all the 3rd party work is important: who paid the salaries of the people who did the work, whose equipment and utilities did they use? We did. Finally, they need to do a proper audit and safeguard the company records before they wind the company up. McElhinney will be staying on to make sure information disappears. We must not let this happen.

Josie MullenNovember 7th 2014.

Thank god for Katie54! I see that, yet again we are not allowed to see the report by KPMG about the serious questions they have raised about record keeping and accounting by Liverpool Direct

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