Case study

South Tyneside Council:

Tyneside transformation attracts 21st Century talent

Challenge

Covering 25 square miles, South Tyneside is the smallest metropolitan borough council in England and Wales. Once globally renowned for shipbuilding, coal mining, and heavy engineering, it experienced industrial decline in the 1970s and 1980s. Today, the Council has strong socio-economic regeneration ambitions. For example, its old factories and shipyards are being replaced with world-class business premises to bring new employment to the area. What’s now being referred to as north-shoring is just one of many South Tyneside strategies.

Has the gloom of swingeing cuts in public sector expenditure dimmed that vision? Martin Swales, CEO at South Tyneside Council, has this to say: “Of all the 353 Councils in the country, South Tyneside is arguably the hardest hit and has never before had to find savings anywhere near this magnitude. Alongside these financial pressures, we face rising demand for our services. This means that, in effect, we must strive to do better with less. In this new climate, we have an unshakeable vision for South Tyneside to be a great place to live, work, visit and do business, with economic regeneration at the heart of our plans so that we improve prosperity for our communities.”

The story of the BT South Tyneside partnership makes good reading against that background. A genuine public private partnership – attracting inward investment and creating jobs while reducing service delivery costs – it could be the light at the end of what might for many be a very long tunnel.

Already considered one of England’s best-performing local authorities, South Tyneside Council was looking to further improve public services. It sought a long-term partner to support those efforts, while helping drive regeneration. Martin Swales explains: “We were looking for a partner to help drive the long term strategic priorities of South Tyneside. With a proven track record, we chose BT to help improve economic prosperity, generate significantly more jobs and locate BT’s Local Government operations in the borough, kick-starting our major regeneration of the South Shields riverside.”

Solution

A 10-year contract between BT and South Tyneside Council, under which the partnership would provide a wide range of business services, was signed in 2008. Those services include ICT, contact and walk in centres, financial services, procurement, human resources and payroll, and revenues and benefits.

Councillor Iain Malcolm, Leader of South Tyneside Council, said at the time the partnership was launched: “This is a massive coup for the council. BT is a global brand. Its arrival has elevated South Tyneside’s profile on an international scale. The ultimate objective is to create a knowledge economy in the area. This would not be possible without the support of BT.”

In recognition of the venture, BT created a new wholly owned subsidiary – BT South Tyneside Limited – committing to invest around £23 million in service transformation and business process outsourcing over the lifetime of the contract. Some 450 council workers have transferred to the new company, with full protection of terms and conditions, as well as the opportunity for enhanced career development.

Gavin Finlayson, COO of BT South Tyneside Limited, says: “South Tyneside Council is a visionary local authority and BT is proud to be helping it to improve further on that status.” BT has committed to deliver a three per cent year-on-year reduction in service charges for the first five years, plus procurements savings of £16 million. To assure continuous improvement, performance indicators have been agreed covering a wide range of services.

As a demonstration of the reciprocal nature of the relationship, BT has taken a long lease on a brand new office in South Shields – the jewel in the crown of the Council’s riverside development plans. The office accommodates approximately 600 BT staff who undertake a number of BT functions.

BT has also committed to create an average of 750 new jobs in the borough, over the 10-year lifetime of the contract. To this end the new office will form a BT centre of excellence for its local government operations, enabling the company to offer cost effective shared services to other public sector clients. Having BT as a prime tenant will help South Tyneside Council attract other businesses to the region, creating further employment opportunities and aiding the regeneration of the borough.

Value

In its first four years the partnership has implemented a number of changes that have delivered both efficiency gains and cost reduction. In addition, BT has provided local economic benefits, such as increased local and regional spend (see box). A number of external accreditations have been achieved, not least for the BT South Tyneside Limited Customer Contact Centre, which has been independently accredited against the Customer Contact Association’s Global Standard.

Martin Swales says: “BT’s credentials and financial strength are improving the services delivered on behalf of the Council and BT is proving to be an excellent partner in South Tyneside.”

While performance indicators covering key services such as the Contact Centre and e-Services show a positive picture, the partnership is also making an impact on job creation in the region. By the end of Year 4 of the contract, BT and its partners had created 559 new jobs, well ahead of the contractual target in place. A further 90 jobs have been created in the new BT Shared Services operation which will be located in the borough. BT is also continuing to work with South Tyneside Council to attract other knowledge economy businesses to the region.

Mike Conlon, Head of Corporate and Commercial Services at South Tyneside Council, says: “Four years in, the partnership has met or exceeded all service delivery and outcome focused targets. Despite the recession, job creation is now ahead of schedule, the business centre is complete, and savings are being delivered as promised. Satisfaction among our transferred staff remains high.”

The stimulus to the South Tyneside economy is expected to be worth considerably more than £200 million over the partnership’s 10-year term, vitally important in this now cash-strapped sector. Mike Conlon sums up: “As an excellent Council, our standards were high. BT has shown that our outsourced services and staff are in safe hands and that they can be relied upon to deliver what they promise.”

Keeping spend in the local economy

By recognising the long term benefits and increased prosperity that the Council can achieve across its communities and through effective procurement with local suppliers, it has developed the “Supply South Tyneside” initiative, in partnership with BT.

The development of a comprehensive supplier database has established local business supply capabilities and capacity. ‘Meet the Buyer’ workshops, create local business awareness of procurement in the public sector and help ensure that companies are ‘tender ready’ by providing additional advice and guidance. The workshops also provide a sounding board to reflect businesses needs which in turn help inform Council procurement policy.

The Council is able to record where money is spent at local, regional, national and international level. As a result Council local spend has increased from 33.6 per cent in 2010/11 to 39.3 per cent in 2011/12 and 50.98 per cent in 2012/13 - a notable increase in times of austerity.

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