A catastrophic £10.4m overspend by wasteful One Connect Limited last year forced County Hall bosses to pull the plug, it has been revealed.
The ill-fated partnership between Lancashire County Council and telecom giant BT was almost £1m a month over budget when the authority stepped in and scrapped it.
A report, which goes before the council’s cabinet today, lists a catalogue of over-ambitious targets and forecasts by OCL as the key reason the controversial company failed.
And, as a police investigation continues into the running of the business, councillors will be told a new partnership between the council and BT set up in January is already presenting a “far more positive picture”.
Coun David Borrow, deputy leader of the Labour administration which disbanded OCL, said: “The figures demonstrate that where the council is in control of services directly we come within budget.
“Where we don’t have that control there has been a problem.”
One Connect was set up in 2011 by the then-ruling Conservative group to run many of the authority’s services with the aim of saving £400m over a 10-year period.
But last year, following a change of council control, concerns were raised by Labour that the partnership was not hitting its targets.
“On taking office and following a series of talks with BT, they agreed with us in the winter that the joint venture was not working,” revealed Coun Borrow.
“In the early summer last year we were alerted to the fact that forecast savings within the One Connect partnership budget were not being achieved, with demand for services over-estimated against performance and a significant shortfall in anticipated procurement savings identified.
“I quickly asked for this under-performance to be investigated and it became part of wider concerns over the way the partnership was working.
“We now have a much clearer relationship with BT and are in a much stronger position to tackle the financial pressures over the next four years.”
The OCL revelations come in a council report on the state of the county council’s finances amid Government funding cuts of £300m.
Today’s cabinet will be told that County Hall departments are working well to make savings and the authority is in a “very sound financial position.”
Coun Borrow added: “Our county faces a funding gap of £300m over the next few years as a direct result of the Government’s withdrawal of funding to Lancashire.
“Despite these significant financial pressures senior officers across the council have done a good job in ensuring our spending comes within budget.
“The big disappointment was the £10.4m overspend by the strategic partnership - formerly One Connect Limited - which was established under the previous Conservative administration.”