COUNCILS could see their role drastically reduced under a new approach to providing services, according to a union report.

A study for public sector union Unison says that the Government's Best Value programme could see councils left only with the power to manage contracts, instead of running services themselves.

The report, by academics at Newcastle University, says that the move could also lead to a loss of jobs and worse terms and conditions for remaining employees.

The union is launching a campaign for greater investment to improve services and safeguard the role of councils.

The study, by Dr Andy Pike and Peter O'Brien, at the Centre for Urban and Regional Development Studies in Newcastle, said: "Trade union involvement in Best Value is a safeguard against the 'hollowing out' of local government and the creation of 'virtual authorities' that are eroding local democratic control in the provision of public services."

Lynne Robson, local government spokeswoman for Unison in the North-East, said: "Unison believes in council services which are high-quality, good value for money and accessible for those who need them.

"To provide these in the North-East we need money and investment to put right more than 20 years of neglect, decline and under-funding."

The Unison campaign includes a petition calling for more investment in public services, which will be presented to Local government Minister and Durham North-West MP Hilary Armstrong, on Saturday.