Britain's largest council is in the fourth year of a 10-year £425m service deal with Capita through a joint venture called Service Birmingham.

The project, which began in April 2006, has included a £2m investment in a new server estate, the consolidation of seven service desks into just two and rationalisation of 550 applications to 150. As a result, email speed is up 500 per cent, and the number of helpdesk calls now answered within 20 seconds has increased from 40 per cent to 90 per cent.

The council has also ironed out some of the initiative's teething problems. In January, the council announced it would save £46m in 2009 after turning round its failing SAP-based Voyager procurement system, which crashed repeatedly in the four months after its October 2007 launch.

At one point the system had a backlog of 20,000 to 30,000 unpaid invoices, but the council now says that nine in 10 bills are paid within 30 days, and claims that the system would now deliver savings on £625m by 2018.

The success has led to the expansion of Service Birmingham into a business transformation programme aimed at delivering savings of £1bn over 10 years through more efficient ways of working. The project's nine business transformation programmes range from securing more effective procurement of goods and services and offering world-class customer service standards to improving the quality of social care, housing and youth healthcare.

The council has also launched the Digital Birmingham scheme, a strategic partnership of private, voluntary and public organisations aimed at establishing Birmingham as a leading European digital city by 2010 and ensuring the benefits of technology are available to all in the city.

One initiative is the country's most ambitious public sector IT recycling team, which pledges to exceed the national average for recycling IT products (currently 26 per cent) by re-using up to 85 per cent of monitors and base units through doorstep collections from both residential and business properties.

In January 2009, the council won an e-Government award for its Aston Pride Computers in the Home project, which encouraged the Aston area's youth to pass on their IT skills to family members. This was extended throughout the city through a series of comic books sponsored to the tune of £38,000 by government agency Beta, and has targeted older citizens and visitors to the city by established a presence in virtual world Second Life which interacts with visitors through Google Maps and video.

Another online community set up to encourage citizens to contribute to local decision-making was Birmingham's Open City plan, which won a slice of the Department for Communities and Local Government's £620,000 grant for pilot information schemes, and which ran from April to August this year.

Digital Birmingham's economic development manager, David Harte, said: "We'll be working closely with the city's vibrant development community and a strong network of community organisations that recognise the need to use new technologies to influence local decision-making. Thanks to government funding, we can help create the right conditions for new engagement tools to be produced."