Bournemouth Borough Council is set to become the latest authority to scrap a long-term ICT outsourcing contract in order to save money.

The council will next week consider a report recommending the council insources back office services currently provided under a 10-year contract signed in 2010 with supplier Kier (formerly Mouchel).

A report going to cabinet members says that cuts to services are needed in response to reductions in government grants.

It said: “This creates a potential conflict in strategic aims for both the council and Mouchel/Kier. “The council will wish to see major reductions in spend in this area of up to £10m through budget reductions or joint working over the next five years and to see 100% of the benefit.

“Mouchel/Kier will wish to see growth in income and margin. The financial drivers for both organisations are therefore now considered to be diverging significantly.”

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In December 2010 the council agreed a strategic and incremental partnership agreement with Mouchel covering ICT, revenues, benefits and facilities management.

Two years later, human resources and financial services were added to the partnership agreement. The contract currently costs the council £14.1m a year.

The council said that the partnership has performed “very well” over the past five years, achieving savings of over £10m as well as increasing investment.

“However,” it said, “the future for local government as dictated by central government has changed dramatically since the general election.

“In short, that means that the council will now have to deliver services which are to be contracted significantly in size whilst still requiring further development and investment.

“This can only be achieved by removing even further support services costs from the contract as a matter of urgency if front line services are to survive in their current form.”

Bournemouth is currently working with neighbouring councils to consider the future shape of local government in Dorset.

A statement from the council said: “Whilst the outcome of this is many months away, change is inevitable, be that one or more larger new unitary authorities replacing existing councils, or much greater levels of joint working and shared service delivery to achieve efficiencies and streamlined services.”

Council Anne Filer, the council’s cabinet member for corporate efficiency said: “We know there may be some commercially sensitive costs associated with taking services back in-house, but these will be outweighed by the flexibility that insourcing will bring.”

Earlier this week, Cornwall Council formally ended a 10-year outsourcing deal with supplier BT Cornwall.