A CONTROVERSIAL services contract between computer giant IBM and Essex County Council will cost the taxpayer at least £12.8million and could last for as long as 12 years, the Guardian can reveal.

The privatisation scheme, which has been shrouded in secrecy since it was ratified last month, is being introduced in an attempt to save the authority money by identifying areas for “efficiency” cuts.

Under the terms of the contract, IBM will review all services the council provides, before stepping in to make suggestions for savings, and could potentially see the company help run the district's schools, roads and libraries.

The deal, the first of its kind in the UK, was earmarked to last for eight years, but a Freedom of Information request by the Guardian has revealed that a clause in the contract allows it to be extended for a further four years at the authority's discretion.

It has also emerged that the council has budgeted to pay IBM at least £12.8million over the next three years, and that final costs could be much higher.

Essex County Council is allowed terminate the partnership after two or four years, and it can procure service contracts from companies other than IBM.

However quesions still remain. The council turned down the Guardian' request to see the whole contract citing “commercial interests.”

The deal is part of the council's aim of achieving £300million's worth of efficiency savings, although in December it said it was already on course to have shaved £55million off that total by the end of 2009.

But critics such as union Unison claim that IBM will put its profits before the welfare of residents and that the scheme could lead to thousands of job losses.

Money-saving schemes already announced included a new “improved” method of the council procuring of contracts, cuts on “wasteful” spending and enhanced use of modern technology.