Revealed: Borders Council's secret £34 million splurge

 EXCLUSIVE by DOUG COLLIE

Scottish Borders Council which has deemed it necessary to make financial 'savings' totalling £55 million since 2013 has embarked on a short-term £34 million spending spree after signing up to a controversial contract extension with IT specialists CGI until 2040.

Now spending on capital projects over the next three financial years will have to be "reprioritised" and cut back, and budgets will be juggled to allow SBC to find £5.7 million in 2020/2021 alone, and a further £28.3 million by 2024 to pay for the local authority's side of the bargain.

There was no mention of costs or financial implications for council taxpayers when the massive deal was announced in October. And details of the various projects to be undertaken via the £34 million 'transformation funding' were not revealed either.

The joint statement from SBC and CGI said: "Together we will lead the way in creating a smart, connected rural region, which will digitally connect all Borders communities, supporting innovation, empowering a flexible workforce, advancing truly integrated partnership working, and providing solutions to allow greener, low carbon ways for a sustainable future. 

"We will do so by advancing cutting-edge digital systems and processes for all the Borders’ citizens and employees in key areas such as social care, health, its world-class education IT programmes, employment, the environment and sustainability."

But confidential documents and private minutes released by SBC following a Freedom of Information request reveal the huge financial input by the supposedly cash-strapped council - and the strong opposition to the contract extension by some councillors.

The Conservative-led authority's elected members were warned in presentations leading up to a final decision in September of the issues the deal might produce.

In reports submitted in August and September David Robertson, executive director finance and regulatory wrote: "There are some potentially negative aspects to extending the contract with CGI: The pace and scale of investment required at £34m is challenging, although officers believe necessary.  The increased transformation programme is extensive and therefore there are risks around the capacity of Council and CGI to deliver."

And he added: "The 20 year, long-term commitment proposed may reduce future flexibility."  In fact the arrangements sanctioned by councillors is scheduled to last throughout the next three elected administrations.

The ability of the council to identify some £16 million from its capital budgets to help fund the digital transformation seems remarkable given that SBC's leader Councillor Shona Haslam told the Southern Reporter in March 2020 they were 'having to cope' with a 25% cut in the capital allocation from the Scottish Government.

The documents released by SBC contain a financial summary of the offer from CGI to secure the 'unprecedented' extension to its contract, originally signed in 2016 and meant to expire in 2029. Now a six year option plus a further five year extension stretches out the lucrative deal until 2040.

The extension has a gross contract value of £76 million with CGI offering a £11 million discount, £8 million of it between 2021 and 2023. In its calculations the council includes that £8 million as part of the £34 million expenditure on transformation investment.

According to the figures the £11 million reduction brings the service charges payable to CGI down to £65 million, and with the council's £34 million contribution the total contract extension value is £99 million.

When the original deal was signed it was valued at £110 million, £91 million of it in service charges so the revised overall contract value now stands at £209 million.

The itemised figures showing how this year's £5.7 million will be earmarked before being taken from council coffers break down like this: IT transformation reserve £265,667; energy efficiency reserve £300,000; balance sheet review £1.5 million; existing IT capital budget £270,000; delays in 2020/21 capital plan £3.331 million.

And a table setting out the allocation of a further £28,333,333 to be identified and spent by SBC between 2021 and 2024 shows the following: service discount £8 million; existing capital IT projects £840,000; CGI digitally enable new buildings £4.5 million; re-prioritise capital plan £1.8 million; NHS contribution to digital health to be confirmed; external funding opportunities other councils have achieved £2 million; re-prioritise capital plan to a maximum of £11,193,333.

However, it appears that those councillors who voted for the deal did so without being told or deciding which of the planned projects in the capital expenditure programme would have to be axed or at least delayed for several years.

Apparently the £34 million 'transformation' investment is to be divided between council departments like this: Assets & Infrastructure £7.890 million; Health & Social Care £11.070 million; Customer & Communities £6.250 million; Finance IT & Procurement £1.135 million; Children & Young People £3.875 million; Contracted Services (Live Borders, Sport, Heritage & Culture) £280,000; and Business Change Support £3.5 million.

One of the newly disclosed documents - a report to councillors in August - also explains the advantages of a deal to the council's IT providers: "CGI is a major employer, keen to further invest in the Borders and demonstrate to its shareholders and members that they are continuing to win new business and importantly retain existing clients. Extension of the SBC contract will enable CGI to book this as new business providing stability to members living and working in the Borders and investing in its economy."

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