A partnership between Liver-pool City Council and BT to provide the local authority's HR and other services is being considered as a solution to union concerns over private finance initiatives in the public sector.
Services have shown significant improvements and absenteeism plummeted since 1,200 council staff were seconded to the joint venture company Liverpool Direct in April 2000.
The joint initiative is being studied by Unison, which has just published a report highlighting its concerns about the use of the private sector to deliver public services. It fears this creates two-tier workforces without improving services.
David McElhinney, chief executive of Liverpool Direct, believes one of the main benefits of the initiative, which also delivers payroll, revenue, benefits and IT services, lies in its inbuilt safeguards for staff. Seconded employees remain employed by the council and retain their final salary pension.
Any Liverpool Direct employee can return to the council if they want and will have their pay protected for two years regardless of their allocated role.
"Staff feel they are working in a secure environment and there are benefits in both motivation and loyalty," said McElhinney.
Service improvements include a reduction in absenteeism of 60 per cent across the council, the clearance of a 15-month backlog of revenue and benefit claims and £1m in rent arrears recovered.
The £300m, 10-year initiative has also enabled the council to benefit from a cutting edge ICT infrastructure. Much of the progress stems from Liverpool Direct's 225-seat call centre, being expanded to 500 next year. Call centre staff turnover is only 2 per cent, possibly due to high salaries of £19,000.
Stephen Blakesley, Unison regional officer, said: "So far Liverpool Direct is meeting its objectives and generally speaking, staff are content."