The delivery of public services needs to be transformed if the UK is to tackle the budget deficit, consultancy KPMG has warned.
KPMG said radical changes would have to be made ahead of what it said could be a decade of austerity.
UK public sector organisations are much slower than those in other countries in implementing the measures necessary to cope with the financial crisis, according to the firm.
Its report Tough Choices Ahead: the future of the public sector recommends cutting expenses, improving efficiency and what it calls “strategic transformation” - identifying new sources of funding and involving the private sector in costing public service delivery.
The report follows a warning to councils from the Accounts Commission that they need to prepare now for a tough future of reduced funds and increased demand for some services.
Jenny Stewart, head of public sector at KPMG in Scotland, said: “We must start to consider the long term effects of the economic downturn on the public sector.
“By now it should be clear to everyone that the financial pressure which is coming along in the public sector cannot be faced with the traditional cost-cutting and efficiency programmes.
“The public sector protracted downturn does not require the same immediate response as that of the private sector but a long term strategy that is seeking fundamental change.”