Bournemouth Council is set to bring a £14m outsourced contract to supply a range of back office functions back in house as it grapples with 'unprecedented financial challenges'.

The local authority is facing a 29.8% cut in its revenue support grant for next year and an additional 36.8% cut the year after.

The council currently has a contract with Kier for HR, finance, revenue and benefits, facilities management and IT.

Council leader John Beasley said the council had done well to deal with financial challenges to date but 'has no choice but to look further and deeper into its departmental budgets, to do all that it can to protect frontline services'.

He added: 'In this increasingly difficult financial environment, it is apparent that the council needs to control directly the annual £14m spend currently associated with the delivery of services within the Kier partnership contract, so that we can make further changes without the need for more complex contractual negotiations.

'Given the current financial position and the case for local government change in Dorset being developed, the council has chosen to fully review the provision of services within the Kier (formerly Mouchel) partnership contract. The result of this review is a recommendation to cabinet that, during 2016, the council brings all services delivered by Kier as part of the partnership, back in-house.'

Craig Apsey, Kier Business Services managing director explained: 'The partnership has been incredibly successful over the past five years, delivering over £10m in operational savings since 2010 (more than was expected or defined in the original contract), major service improvements, and helping to create over 175 new local jobs with an economic value of £13.4m. This is in addition to wider initiatives like the £4m invested in the Carbon Management Centre, reducing council emissions by 26% and the launch of a new Apprenticeship Company, which aims to support 125 apprenticeships by September 2016.

'However, the landscape for local authorities has changed substantially over the past five years, with severe and repeated government budget cuts, and radical cuts to the revenue support grant in parallel with the opportunity to form a new devolved combined authority. All of which means that the council may now need services to return to their direct control in order to navigate this change.

'The partnership was originally designed to provide this kind of flexibility to accommodate a changing landscape and client needs, and if the decision is agreed at cabinet next week we will work with the council to support our teams as they transition back to council employment, and will do all we can to maintain service levels and ensure a smooth and successful transfer of services.'