Government reforms of outsourcing to avoid another Carillion collapse must be extended to local government where commercial skills lag behind Whitehall, a report from the Institute for Government (IfG) think-tank has said.

In its study two years after Carillion went into liquidation, the IfG said reforms laid out in the Cabinet Office’s Outsourcing Playbook on best practice published last year ‘have led to some improvements’.

However, the IfG added: ‘There appears to be little awareness of the reforms beyond Whitehall, in local government and public bodies.

'These bodies manage procurement spend worth more than £100bn annually, but the Cabinet Office currently has no remit or budget to extend the reforms beyond central government.

'This is particularly important because interviewees said that public bodies and local government are further behind in terms of developing commercial skills and raising standards.’

The IfG report recommended that local authorities should incorporate the Playbook into its approach to accountability, including audit committees and peer reviews.

However, there is no Cabinet Office budget to extend reforms beyond Whitehall and, although it has held meetings with local authorities, it is unable to provide them with training and support.

Head of infrastructure and public sector policy at the Confederation of British Industry, Liz Crowhurst, said: ‘We appreciate the Cabinet Office has no powers over local government on this but we would like to see more training and would be happy to work with the LGA [Local Government Association].’

Ms Crowhurst added the procurement Green Paper expected in the summer would be an ‘opportunity to change laws post-Brexit’.