Southwest One, the troubled West Country council shared services venture, has confirmed it has received urgent funding from its supplier.
IBM has issued a multimillion pound loan to Southwest One, in order to keep the venture afloat. Southwest One, in its latest annual accounts issued this month, reported a £31 million loss.
Southwest One was one of the first major council shared services ventures in the UK. It operates on behalf of Somerset and Taunton Deane councils, and Avon and Somerset Police.
Southwest One told Computerworld UK that the losses reflect the "challenging economic conditions", and insisted it had "negotiated contracts that will deliver savings of at least £71million" for the councils over the coming years. Some £15million savings have been generated so far, it said.
The councils and IBM have produced a new plan in an attempt to bring the venture back into the black, though it is not clear how much of the money is recoverable. IBM has not commented.
A Southwest One spokesperson said the venture "has implemented a new model designed to improve its financial footing from 2012 onwards".
"As part of the new model, IBM has taken security over future funding. This is common in a business relationship."
Yesterday, Somerset Council head Ken Maddock, a Tory councillor whose administration inherited the programme, said the venture was "failing". He described the £31 million loss as "staggering", according to a report in the Burnham and Highbridge Weekly News.
Maddock told councillors that the venture was "failing to deliver promised savings; failing to cope with a changing financial landscape; failing to be flexible enough to adapt in challenging times and provide the best possible value for money".
Southwest One insisted in response to Maddock's comments that the venture had delivered "major improvements" to the councils so far. This included better council tax collection, a new broadband network for Somerset schools, customer service changes and job creation.