Page last updated at 23:26 GMT, Saturday, 22 August 2009 00:26 UK

Call to overhaul council system

Office worker
The CBI said councils could contract out and share some services

Scotland should consider cutting the number of local councils to save money, business leaders have urged.

CBI Scotland called for a debate on whether to keep all 32 Scottish councils, as part of efforts to save taxpayers' cash.

The CBI also said council tax levels should continue to be frozen until bills reach "more affordable" levels.

The calls were made in a report to the Scottish Parliament as part of a local government finance inquiry.

The report stated: "A more fundamental review of the structure of local government should be debated, particularly the vexed question of whether or not we still require 32 different local authorities and all the costs that involves, or whether a different model - e.g. involving metropolitan areas covering the principal cities - ought to be put in place."

Tax freeze

A starting point for this would be to share services, a move already under consideration by eight councils in west central Scotland, the CBI said.

But the business group went further, calling on councils to consider contracting out payroll and other "back-office work" to specialist firms.

There should be heavier use of private and voluntary sectors - making councils a "commissioner of services" rather than provider.

The CBI said greater collaboration across councils to drive down costs, for example in payroll, should be considered.

Average band D tax increased from £708 in 1997 to £1,129 in 2007 - a rise of 59% - while earnings grew by 49%, the CBI said.

The report added: "A continued freeze in the level of the council tax could see that public anxiety lessen and the need for changes to the system consequently diminish, and should continue until such time as council tax returns to more affordable levels."

The Scottish Government negotiated a council tax freeze across the country following an election pledge.

While the CBI welcomed that step, it said a "golden period" for devolved spending was over.

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