The IDeA, which was brought into the council after it was lab-elled the worst in the country because of the poor state of its finances, recognises the LDL deal has produced major service improvements for the council.

The “core contract” with LDL has grown from £32m a year to £55m since it was set up in 2001, although a number of other services have since been added.

An additional £15m is being billed to council departments.

“The form of the partnership has created within the council a feeling of dissatisfaction with the performance and some doubt as to whether the arrangement now represents good value for money,” the report states.

“The basis of billing is opaque and management information does not include any cost infor-mation. The lack of transparen-cy on billing and the value for money in the core contract have raised doubts about the value for money overall.”

The report goes on to criticise the £15m of additional services which are being invoiced to council departments.

“Again, it is not clear what these charges are for and what the arrangement is compared to the original contract.”

In March, LDL agreed to double its sponsorship of the Culture Company from £2m to £4m, helping the council fill a £20m gap in the Capital of Culture budget.

The new £2m must be repaid if the council terminates its contract early.

Value for money of the contract is “distorted” by an accounting treatment which has been used to create additional resources in 2008/09, the report states.

It adds: “A value for money study of this contract is required now.”

The report also raises questions about the cost of maintaining personal computers.

“The arrangement for seconding a Liverpool director to run this contract further blurs lines and loyalties and should be addressed.”

Deputy Labour leader Cllr Paul Brant said: “This information is a devastating indictment of the council's relationship with LDL.

“For years, Labour coun-cillors have been pointing out potential conflicts of interest with senior Lib-Dem councillors and officers on the LDL Board, contrasted with the lack of real financial information available for external scrutiny.

“It is essential that a fair relationship delivers good value for money for Liverpool residents and excellent service levels, but many fear that there is a real risk Liverpool is being ripped off by these contracts.

“I am glad that, after all these years of being warned by us, the council is finally recognising that it needs to have a long, hard look at this arrangement.”

In November, 2006, the Daily Post revealed how accountants KMPG had uncovered huge failings in the LDL contract.

Revenue of £67.5m in operating costs

ACCORDING to Liverpool Direct Limited’s latest set of accounts, BT accrued management fees of £31m from the LDL deal, in the year ending in March, 2007.

LDL "recognised" revenue of £67.5m in operating costs from Liverpool council, of which £31m was due to BT and £36m was incurred in expenses by the council. In the previous year, LDL had operating costs of £55.6m, with BT incurring management fees of £26.8m.

The company is 80% owned by a subsidiary of British Telecommunications plc, and the remaining 20% of the firm is owned by Liverpool City Council.

Leader highlights improvements

LIVERPOOL council leader Warren Bradley last night admitted the LDL contract needed to be looked at, while praising the service improvements it has achieved.

Since the joint venture was set up in 2001, the council’s benefits service has been transformed with claims being dealt with in less than 20 days, rather than the 130 days it used to take.

Cllr Bradley said: "Yes, it needs a look at, I am not denying that. But we have also got to look at what has been achieved."

The city now has a call centre that is open 365 days a year, a number of one-stop shops to provide information, and the contract had bought many services into the 21st century, he said.

"That said every single contract, every single service that we provide to people must be periodically reviewed.

"The services being provided by LDL are second to none, but whether it’s value for money - it’s time to look at it."

Cllr Steve Hurst, executive member for corporate performance, will now carry out a full review the contracts in all the council’s joint ventures, Cllr Bradley added.