A council has been criticised by unions and the private sector after deciding to launch its own PR consultancy.

Brighton and Hove City Council insists the new company, which will offer services to other public service bodies, will not cost the taxpayer a penny.

However Mark Turner, of the GMB, branded the idea “absolutely ludicrous” because it comes at a time when all departments face massive spending cuts.

He said: “What the council should be doing is getting its own house in order first to make sure we are not losing jobs and frontline services.

“We are still waiting to hear how the council is going to meet the £3.5 million cuts they were ordered to find by the Government in June. And there are still more cuts to come.”

Existing PR companies also outlined their fears that a council-owned competitor would have an unfair advantage when trying to win work with the public sector.

Vicky Stoakes, director of Brighton-based Indigo Cow, said: “From a business point of view, they will have the advantage over other young PR companies by having the funding of the public to enable them to set up – something other new PR companies could only dream off.

“The ‘official’ backing will also give them a head start in finding new business.

“Unfortunately some public service bodies may believe that as the agency originates from the council, it’s a stamp of approval, whereas there are many excellent local agencies, with strong expertise across wider sectors, which could give public service bodies a stronger and more competitive edge.”

Ruth de Mierre, of de Mierre Communications in Haywards Heath, said: “I can see no reason why more public sector bodies do not outsource their communications to the private sector.

“There are a great many very hungry agencies who would, I feel, give an extraordinarily competitive and professional service – and would save the taxpayer a great deal of money.”

Not all PR agencies were against the council’s decision.

Caraline Brown, founder of Brighton-based Midnight Communications, said: “I don’t feel there will be any threat to private companies like Midnight. In fact there may be opportunities to work together in the future, though it is too early to say what these might be.”

A council spokesman said any profit the agency made would be reinvested back into council services.

He said: “The whole idea of this agency is to reduce costs to the local taxpayer.

“We want to use our specialist skills in communications to take on external work, which would not only raise additional money to help pay for our frontline services but deliver cost-effective communications to our public sector partners.”