The community right to challenge, which enables community groups to bid to take over the running of local public services, is underused and should be reviewed, a cross-bench group of MPs has said.
A report called Local Government Procurement, published yesterday by the Communities and Local Government Committee, says the community right to challenge is "not being used to any great extent".
The power, introduced under the Localism Act 2011, gives community or voluntary organisations the right to challenge to take over local services if they think they can run them more effectively.
It applies to services being operated by local authorities and fire and rescue services.
The report quotes evidence provided to the committee, chaired by Clive Betts, the Labour MP for Sheffield South East, by the umbrella voluntary body the National Council for Voluntary Organisations, which said that out of 22 challenges that had been formally launched only two had been accepted.
"Government policies to encourage communities to engage in service delivery through mechanisms such as the community right to challenge do not appear to be being used to any great extent," the report says.
"We recommend that the government undertake within six months a review of the barriers to its uptake, including costs to councils and would-be suppliers of entering into a full-scale procurement exercise and how these might disadvantage some sectors, in particular the voluntary and community sector."
Matthew Jackson, associate director at the research organisation the Centre for Local Economic Strategies warned of the "considerable drawbacks" of the power, the report says.
He told Third Sector: "If a local authority agrees with the challenge, then it would begin a formal tender process that would open them up to competing with big multinational companies and they won’t necessarily win the contract.
"It should not get to that point in the cycle. The key is better relationships and earlier engagement with the community and voluntary sectors."
The NCVO said in its evidence that the right to challenge at least allowed organisations to begin conversations with councils that would not otherwise have been possible, but said a more informal approach would be easier.
Asked to comment on the committee’s recommendation, Baroness Stowell, the local government minister, said in a statement: "All local authority contract opportunities should be open and transparent to allow a wide range of suppliers to bid for business."