BOURNEMOUTH Council has entered a new era. Private sector consultancy, Mouchel, has assumed control of four core services - revenues, benefits, ICT, and facilities management - in a 10-year deal worth nearly £150m.

The architects of the partnership have heralded a "win-win" scenario in which costs could fall by nearly six per cent a year under a contract guaranteed to improve services to among the top 25 per cent in the country.

But those opposed to the contract say it is "a disaster for Bournemouth" that could cost the taxpayer an additional £2m a year in a deal they claim will only benefit Mouchel's shareholders.

Plans to outsource services were formed two years ago when the collapse of the international banking system ushered in a new era of austerity. All parties are agreed that doing nothing wasn't an option.

Annual savings of 5.9 per cent are promised from the first tranche of outsourced services, with a target of 40 per cent over the 10 years if, as the council intends, further services are contracted to Mouchel.

Procurement may be the next service to be outsourced. But the level of savings promised is queried by opponents of the deal and some of the council's own financial officers.

Council managers say the contract is filled with penalty clauses allowing the authority to withhold funds if Mouchel fails to achieve key performance indicators, and further compensation if the failure of a service causes financial loss.

The council can end the contract in the event of "significant failure of performance".

The contract guarantees top quartile performance against independent assessment by bodies like the Audit Commission.

Enforcing the clauses would require a difficult and expensive legal process, opponents have claimed Mouchel has endured its own challenges in recent times, shedding 2,000 jobs since last January, and only recovering slightly from a 30 per cent drop in share value in October after agreeing its deal with Bournemouth council.

Opponents say Mouchel has failed to create jobs elsewhere and is vulnerable to take over bids. But managers are confident that the firm, which provides back office services for several other medium-sized unitary councils, is a "good fit for Bournemouth".

The Echo understands that Mouchel's guarantee of 350 new jobs was the deciding factor in the officers' recommendation that councillors approve the contract.

They hope Mouchel will create a regional processing centre in Bournemouth, bringing work from its other client councils. The partnership will also create a a further 250 posts at the BIC and town hall to "showcase" green technology.

But opponents have dismissed the targets as "aspirational" and argued that the £20,000 penalty for non-delivery of each guaranteed job has been factored into Mouchel's margin.

Some 88 redundancies will be made over two years, but half will transfer to the new work. A further 18 posts have been left vacant in anticipation of the partnership, and remaining losses will be shed through a process of natural wastage.

Managers say government cuts would have forced the council to make redundancies, while unions claim they have been kept in the dark.

Senior managers say the services will be delivered by the same people in the same place, and promise a "seamless" transition.

Councillors will be encouraged to contact Mouchel partnership staff in the same way they currently take up residents' concerns with council officers, they say.

But critics claim the council has ceded vital democratic control of a public service to a private organisation.

Peter Charon, Leader, Bournemouth Council

"I'm persuaded that Mouchel will do a better job at considerably less cost to the council over a period of 10 years. They will find more efficient ways of doing things.

"It won't happen over night but will come in time. We are certainly going to be keeping our options open for further opportunities for outsourcing.

"There are simply things that the private sector can do that we as a public sector body in the past have not been quick enough to embrace. We have to change the culture. We need a catalyst for change.

"We are not just talking about tinkering at the edges of revenues and benefits. This is a wholesale and fundamental change. We couldn't do that by ourselves."

Ben Grower,Labour group leader, Bournemouth Council

"It's a disaster for the people of Bournemouth. It will cost nearly £2m a year more than we are paying at the moment - that's £20m over the next 10 years. The only people to benefit will be Mouchel's shareholders.

"There will be no new jobs. They said this in Oldham and haven't delivered. They have sacked 2,000 of their own people.

"If they don't deliver the jobs they will be fined £10,000 a job, but they money is built into the contract. The fines they have to pay will be covered by the £20m they are making.

"The council's own financial officers say savings of 5.9 per cent are not an accurate, by the council ignored their advice. The independent accountants refused to say one way or another."

Claire Smith, Lib Dem group leader, Bournemouth Council

"There are no guarantees. A lot of what is being dangled as a carrot is aspirational. In this time of austerity, I would like to have seen something more concrete.

"I'm not completely opposed to outsourcing. We outsourced the catering and that works well. My problem with this is that it started on the wrong footing.

"We didn't invite an in house business case, which should have run alongside the business case from Mouchel, so we had something to compare their figures with.

"To enforce a penalty clause, you are going to have to show that Mouchel have acted negligently. I'm not sure we would be in a strong enough position to enforce that."

Tony Williams, Executive Director, Bournemouth Council

"For residents, the services will be delivered very much as they are now, with the same people, in the same place, providing the same service.

"The public of Bournemouth will share in the financial benefits of service improvements. Mouchel are contractually committed to delivering top quartile performance.

"We know that for staff this will be a difficult time, but the track record of these contracts is that staff satisfaction increases.

"The partnership with Mouchel will create 350 jobs by 2015 and up to 650 jobs by 2020.All the jobs associated with the partnership will be based in Bournemouth."