Software vendors have been allowed to hike prices they charge to local authorities grappling with changes to council tax, a government report has found.

In a report for the Department for Communities and Local Government, Three Years On: An Independent Review of Local Council Tax Support Schemes, former Tory MP Eric Ollerenshaw said that in one instance a firm charged councils £30,000 to make “just one small change”.

Ollerenshaw said a lack of competition was driving up costs.

“At the fundamental level, there seems to be little or no market competition between software providers,” said Ollerenshaw. “For the most part, councils mentioned just one or two software companies. There was a sense from some councils that these companies have benefited greatly from the localisation of council tax support, charging exorbitant amounts for minor changes.”

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He added that in a time of pressured council finances, high upfront and maintenance costs for IT can undermine a council’s ability and willingness to innovate.

“To quote the submission from Leeds City Council: On a very practical level, ICT systems presented a significant barrier to introducing new and radical schemes,” he added.

Local authorities have had to operate various software systems for local council tax support schemes. These were introduced after the abolition of council tax benefits in 2013.

The report recommended that councils should consider options around joint procurement of software providers.