But contractors say they do not want to compete with councils and want an end to market testing for services.
At a best value and employment conference in London last week, LGA chairman Sir Jeremy Beecham said councils should be free to compete to work for other councils, utility companies, other agencies and private customers, 'subject to proper safeguards'.
Creating a level playing field for contractors and councils should go further than protecting employment conditions, he said. Competing for outside work would be a market test in itself and would widen choice.
Stelio Stefanou, chairman of the Confederation of British Industry's local government procurement panel, said the CBI had strong reservations. 'It harms the chances of councils getting value for money, is not in the interests of staff and discourages the private sector from competing,' he said.