By Marcus Leach

The 19th century model of Whitehall departmental funding will today (Monday) be described as "not appropriate for the modern day" by council leaders.

The Local Government Association is now calling for a shakeup of Whitehall structures, quangos and accountability mechanisms to ensure that they reflect the needs of the digital era.

Council and other local leaders are pressing the case for greater use of community budgets and payment by results for funding and managing local public services. These have already proved successful in helping troubled families, and could save millions of pounds if they are implemented more widely.

Community budget pilots have been ongoing for quite some time, and council leaders believe there is a need to move quickly on this agenda. The joint work on troubled families indicates that central and local government can work effectively on bringing the funding of public services into the 21st Century.

The LGA believes that greater diversity in the provision of public services in public health, education and employment support and new ways of funding them means there is a need to review Whitehall structures.

"The 19th century departmental approach to organising public services in Whitehall needs to change, if services are to be taken to the next level and address complex issues while also finding savings," Councillor Sir Merrick Cockell, Chairman of the LGA, said.

"Having been given unprecedented spending cuts of 28 per cent, councils and local agencies are pressing ahead and making structural changes happen locally.

"Now it is the turn of Whitehall, which has so far been relatively shielded from the spending cuts. We need a shakeup of the ways government departments are currently organised to ensure they meet the needs of 21st century public services.

"Councils are calling for real pace and urgency in taking forward community budgets to achieve this."

The CLG Select Committee is today holding an inquiry into community budgets and the benefits they have brought to families with multiple problems.

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