A DEAL has been signed to transfer up to £1.9billion of Lancashire’s public services to a private company.

More than 500 County Hall staff will initially be seconded into the new company after councillors approved the move this afternoon.

In a drastic change in the way services are delivered, the as-yet-unnamed company will be part-owned by Lancashire County Council and BT.

Bosses hope the company will expand to generate more money by taking on more office-based work, like customer services, HR and payroll, from other organisations.

It is understood this could create jobs across Lancashire, rather than centralised in Preston.

But similar arrangements have been criticised in other parts of the country for not being accountable or providing value for money.

And there are fears over jobs, with other public sector bodies, including district councils and colleges, invited to hand over their back-office functions.

The 10-year deal will see Lancashire County Council initially put £50million a year into the company, equivalent to the current cost of running its ICT, HR, customer contract and procurement departments.

Ownership of the company will be divided between BT (60 per cent) and the council (40 per cent).

If the partnership expanded to the maximum extent possible across Lancashire’s public sector, it could be worth up £1.9billion.

In return for the council’s investment, BT has guaranteed annual savings of £5million - cash which will be paid back to the council.

Conservative council leader Geoff Driver said: “We see this strategic partnership as a way of building on our excellent record of delivering good service and value for money to the people of Lancashire.”

One of BT’s most senior directors, Tony Chanmugam, will also be on the board.