Local government can use its £42bn buying power to re-shape the public sector procurement landscape, communities secretary, John Denham, has said.

Mr Denham last week warned councils they must make their spending power ‘work harder' during the fiscal tightening – but he also acknowledged the sector had a proven track record in innovating to deliver the sort of efficiencies now required across all public bodies.

Speaking at a roundtable discussion on local government spending on 24 September, Mr Denham said: ‘Councils have proved they can be efficient but, given the economic climate, their £42bn [annual] buying power must be made to work harder, with one eye on the future, in order for its real potential to be fully realised.'

To achieve, this Mr Denham wants councils to:

Mr Denham said pilots of local government's Total Place initiative – which will merge funding streams and budgets across a range of locally-delivered public services – offered opportunities to innovate and find new ways of delivering those services cheaply and effectively.

‘By thinking creatively, councils can deliver real social, environmental and economic benefits – helping create jobs, boost skills and support small businesses,' he added.