Call for councils to become "procurement hubs"

Local authorities should seriously consider moving beyond their current role as service providers towards becoming commissioning and procurement hubs, a study by accountants KPMG and thinktank Localis has claimed.

The report warned that councils needed to reassess their priorities against costs and become more innovative to meet predicted expenditure reductions of around 20% by 2011. It also suggested that the running of costly services, including libraries and swimming pools, be transferred to the private or third sector.

The KPMG/Localis report called for assessment of – and possible changes to – a number of areas of policy. These include a review of Comprehensive Area Assessment, “which is often felt to be inaccessible and sometimes holds limited value to local residents”.

Council investments should also be reassessed, with analysis of how investments are prioritised. Different approaches such as risk-pooling should be considered.

Further recommendations include allowing councils – rather than central government – to commission new partnerships, which would allow greater personalisation around the needs of the end user.

In addition, local authorities should set self-imposed targets, if not already set, in the region of 10% of gross revenue to be raised locally. This could be aided through the use of existing powers, the authors said.

Localis chief executive James Morris said: “Councils must not be afraid to make tough decisions. Some are beginning to lead the way and it is up to others to take up the challenge and prioritise funding to match up with their core functions.”

Iain Hasdell, partner and UK head of local and regional government at KPMG, added: “With almost 10% of UK GDP flowing through local government in one way or another, councils are at the forefront of the reform of public finances. Many parts of local government are innovative and progressive. However, much of local government is still struggling with modernisation.”