At the Association of Direct Labour Organisations' annual conference in Glasgow on Wednesday, local government minister Hilary Armstrong said the government would change the law to lift trading restrictions (LGC, 8 May).
She said she was often asked whether best value legislation would give in-house teams the ability to trade more widely.
'Bearing in mind the significant contributions councils have made in providing public services . . . my answer is yes to the chance to trade.'
She said the government wanted compulsory competition replaced by 'creative competition', and said councils would be expected to look at other ways of working in partnership. This offers the possibility of councils being allowed to compete openly with the private sector.
The news is expected to be welcomed by councils disappointed by the limited financial freedom offered in the government green papers on local government finance.
ADLO director John Roberts said new trading powers will help create a level playing field with the private sector.
At a select committee hearing on Tuesday, Ms Armstrong made it clear that councils which perform poorly under best value could will have their freedom constrained.
The full text of Hilary Armstrong's speech is available to LGCnet subscribers,