My initial reaction to the details of the deal was that it looks good - they'd managed to get quite a lot out of BT.
So if you more or less have to keep going (the prudent thing to do, clearly), then this is a good outcome.

Until you start to think about it. LDL is a business, and the contract with them is meant to be a partnership that will deliver all sorts of savings, enhancements, etc. It's patronising and offensive for BT to act like lady bountiful. What wonderful public-spirited people they are. Except they're not, they're a successful private sector company whose purpose is to make money for its shareholders. Nothing else. So what's in it for them?
Well presumably it avoids people actually wanting some proper information on the past dealings of LDL. ERnst & Young didn't get to look at the books of LDL. What the council should be doing is going through the LDL accountd for the last ten years, getting back all the money overcharged (for example, they may well have reasonable prices for IT equipment and peripherals now, but not so long ago things were very different, weren't they??), as well as all the profits from third party work that they held back, plus interest. Not just the conveniently round figure they're offering.
Will they (LCC) still be able to do this, or are they agreeing to stop asking for hard information they are entitled to. I sincerely hope not.
Offering all this, in this way, is good PR that may well make it difficult for people to ask them the hard questions about the accounts that they really need to ask. If it really is such a good deal, then prove it not just by benchmarking, but by implementing the "open accounts" policy they signed up to in the JVA. This is not a contract with an external supplier, this is a contract with a company that is part owned by the council, so there is no excuse not to give access to the accounts (and full and unrestricted access is also specified in the JVA - but never happened).

There are two separate parts to this whole LDL thing - the JVA and the contract, and the elephant in the room really is the governance of the joint venture itself. I've ranted at great length about this on your blog, and while any kind of acknowledgement of the failings is probably too much to expect, I really think this needs to be overhauled, explicitly, before anyone signs up to anything. All there is is a commitment to talk about it. Will the extra LCC directors have any power? Be given access to real (as opposed to sanitised and simplified) information? This commitment needs to be far more explicit - and should have real consequences (penalties) if things don't change.
As you might have seen in my recent "conversation" on your blog with Louise Baldock, there are several other BT joint ventures with local authorities up and down the country. Clearly BT always try to get away with what they can - par for the course, they're in business to make profits. Not to be nice, not to serve the community, but to make money for their shareholders. In any way they can. So when LAs have set up proper monitoring and scrutiny bodies, and managed the relationship and the contract properly, things seem to work, and when they haven't, there are always problems - overcharging, lack of clarity, etc. etc. The standard BT response to this is to threaten legal action, as they have done here. Again, this is par for the course, and doesn't mean much - Essex terminated their contract in 2009, BT made a lot of noise about suing... but then nothing happened. Rotherham have just cancelled and BT do not appear to have made threats of legal action.
So big companies always try it on - whether its padding prices or the kind of corporate bullying we've seen here (it's absolutely par for the course: I spend a lot of my working life translating confidential corporate strategy documents - full of all sorts of creative ways to "enhance their margins" and "improve their competitive advantages" , i.e. make more profits). I don't doubt that Capita, IBM and all the other big corporations that work in "partnership" with local authorities are exactly the same.

So the scandal isn't the overcharging etc. in itself, but the way in which it was allowed to continue for 10 years ...... with the council apparently unable to enforce its rights under the JVA. Which it clearly wasn't able to.
There are, in my view, two reasons for this.
The first is the appallingly supine contract management by the council.
These people are paid huge salaries, from the public purse. They compare themselves to CEOs in the private sector - but it's a ridiculous and pretty spurious comparison. Shareholders of private sector companies do not pay handsome salaries, boiler-plated pensions, etc. to incompetent people. They get rid of them. In the private sector they would have been turfed out ages ago (it's brutal but efficient). But we pay them off handsomely (Phil Halsall - half a million pound enhancement to his pension?), and make them sign gagging clauses (the recent abrupt departure of the City Solicitor - after it took them something like 3 years to actually recruit one) a convenient way of covering up everyone's incompetence. I cannot stand Tories, especially the current lot, but you can see where they're coming from when they criticise public sector fat cats.
This is related to the second problem, which is the huge culture problem at LDL itself - stemming, in all likelihood, from its CEO. There is clearly a need for drastic change. But Mr. McElhinney is the last remnant of the Henshaw regime (and people didn't call that a cabal for nothing). Does anyone seriously imagine that anything will change if he stays in post. So I'd like to see the council digging in their heels on this. Yes, it is BT who appoint the CEO of LDL, but it is Liverpool City Council who pay his salary and pension, and Liverpool City Council who will in the not-too-distant future own 40% of LDL.
Maybe some of this has actually been going on under the radar.