LIVERPOOL Council is braced for legal action from telecoms giant BT if talks to extend their controversial joint venture break down, a secret report suggests.

The threat of legal claims is disclosed in a document which members of the city council’s cabinet will consider tomorrow.

The council and BT are currently re-negotiating the £70m-plus annual Liverpool Direct Limited (LDL) deal.

The contract is due to end in 2017, but has a break clause that can be exercised in 2012.

“There is the potential for... costs arising from legal claims which LDL have offered to waive as part of the refresh proposal,” states the report.

“A preliminary review of these claims suggests any potential damages awarded would be significantly less than the amounts intimated.”

So far, BT has offered significant savings to the council:

£1m a year to fund apprenticeships;

£2m a year for social care, community development and social housing projects;

The creation of a specialist team to find £2m of efficiency savings a year.

BT has also offered a share of profits from third-party work LDL does back dated to 2006. None have been paid because the council and the company were not previously able to agree what was an appropriate level.

The city would also see its stake increase from 19.9% to 40%.