Cash-strapped council chiefs in Southampton are pleading with multi-million pound suppliers to slash their costs as they face a £25m financial crisis.

The council wants its major private sector suppliers to help it make savings of £65m over the next four years.

No threats have been made to renegotiate contracts but chief executive Alistair Neill and finance boss Councillor Jeremy Moulton, pictured, have requested “proposals on cost reductions and any other proposals which would benefit the council financially, while minimising the impact upon services”.

The Tory-run council just unveiled its budget plan to tackle a £25m black hole over the next year including sweeping cuts to services and staff pay, and around 250 job losses, including up to 40 senior mangers.

The council says it is having to make the record savings after up to a third of its Government funding was cut.

Cllr Moulton said: “We have written to all our major suppliers to ask them if they can find new ways of saving the council and taxpayers money, by doing things better and cutting out non-essential costs, without impacting upon the service being delivered.

“The council, its staff and members of the public are being a s k e d to find significant savings to reduce the national deficit. It is only right that we ask suppliers to do the same.”

Business outsourcing giant Capita was the council’s biggest supplier last year receiving more than £40m to provide key services and consultancy.

The council has already refused to renegotiate an early five-year extension to a £290m, ten-year contract to run council departments such as customer services, IT, human resources, property, tax and benefits departments in return for guaranteed savings of £33m.

Other major suppliers used by the council in 2009/10 include Hays Construction & Property (£2.6m), bus companies First Hampshire and Dorset (£3m) and Go South Coast Ltd (£1.7m), insurance firm Zurich (£2.6m), food wholesale distributor 3663 (£1.2m), and BT (£1m). Capita said it had been asked to consider “where services can be delivered differently to generate efficiencies”.

A spokesman said: “The next step is for the council and Capita to thoroughly review and assess what can be achieved. It would not be appropriate to comment on the possible impact at this stage.”

Other major suppliers were unable to comment on the letter last night.

Hampshire outsourcing firm Serco was last year forced to apologise for demanding rebates from suppliers in the wake of public spending cuts.

The firm – which runs prisons, nuclear facilities and ports for the Government – wanted retrospective rebates of 2.5 per cent and warned the way its suppliers responded would affect their “working relationship” in the future.

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