City told to end pounds 78m BT deal; Controversial IT contract must not extend any further: MP demands inquiry into 'scandal' of city's IT deal.

Byline: DAVID BARTLETT 

LIVERPOOL Council's controversial pounds 78m-a-year IT deal with BT must not be extended any further, legal experts have ruled. The joint venture Liverpool Direct Limited (LDL) was set up in 2001 and was originally intended to last until 2012. But in December 2006 the contract was extended to run up to 2017. The city council has now spent more than pounds 223,000 with consultants investigating the LDL contract for more than a [e-mail] year. It has now been revealed the council will not be able to extend it again and must put it out to tender allowing other companies to compete for the huge deal.

Under the current terms, the council can pull the plug in 2012, but it could have to pay BT as much as pounds 20m to do so. It has also now been disclosed that although the chief executive of LDL, David McElhinney, is still employed by the city council his contract states that he must work in the "best interests" of LDL. Last night Wavertree MP Jane Kennedy called on the district auditor to investigate the deal. "It's a scandal. The taxpayers of Liverpool should be outraged." Last month the Daily Post revealed how the local authority is yet to be paid a penny in profit from the flagship IT and call handling joint venture set up with BT eight years ago. The city of Liverpool owns around 20% of LDL and was expected to make significant profits from large amounts of outside work the company has taken on since then. The council has set up an inquiry panel to continue the investigation and get to the bottom of the deal. Liverpool Direct Ltd was set up in 2001, to improve the council's customer services department. It has since expanded its remit into other areas of the authority. The council launched a probe of the contract last year after a damning external report stated that bills for the LDL deal were "opaque" and "lacked transparency" - raising doubts about whether the council was getting value for money. At the first sitting of the panel assistant executive director Ben Dolan defended the deal but said improvements were needed. "There is no doubt that LDL repositioned the city as a place to do business, it was transformational. The issue for me is that it is not unreasonable to expect our partnership to get more efficient over time.

"If we get this right I believe there is huge potential. "The chief executive officer (David McElhinney) - his position was clarified in the 2006 extension, he is seconded to work for LDL and he is required by his contract to work in the best interests of LDL." When asked what checks and balances were in place, Mr Dolan said: "It's not in David's interests or LDL's to mess us about in that respect." He revealed the council and BT were still negotiating over the level of profit the council should get out of the deal. Mr Dolan said he was keen the contract be improved before adding: "There can be no extension after 2017, it's just not allowable according to the city solicitor." But Labour Cllr Joe Hanson hit out at the contract's handling. "I don't know whether LDL gives us the best or the worst value, and what's more important is that officers can't give me these assurances at this moment in time.

"My criticism is we are in 2009 and we are unsure of what we have got, we are eight years in and we don't fully understand it." Lib-Dem Cllr Paul Clein has been supportive of LDL because of the huge improvements in services it has made. He was a member of the council's executive board in 2006 when the contract was extended. "The mind set at the time was that we passed over a number of services in 2001 and we had seen significant improvements and we thought others could be improved if they were passed to LDL." What do you think? Email us with your views at letters@ dailypost.co.uk, or write to us at the address on Page 12

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Jane Kennedy MP David McElhinney