Budget cutbacks have forced local councils to outsource large parts of their HR service. There are fears that transactional HR could suffer as a result.

Under the Comprehensive Spending Review 2007, the Treasury informed local governments that budgets would rise only incrementally, resulting in a real term -0.01% increase in 2010 is one of five two-tier local authorities to be chosen as 'pathfinders' - councils that must find new ways of working more closely with the district councils in their locality, in the hope savings can be made.

The outsourcing agenda will be "massive over the next few years" as local authorities try to cut costs. Changes being considered include merging county and district councils back offices.