There has been a huge increase in the use of political consultants and lobbyists to help councils prepare their submissions for the Local Government Commission, and to test local opinion.
Yet the future of the review is still unclear. The Government has put off a decision on ways to speed up and shorten the review, after John Major, the Prime Minister, said he was unhappy with new proposals from John Gummer, the Secretary of State for the Environment. The decision is not expected until next month.
Now the Audit Commission has stepped in because it is unhappy with the way councils are using or proposing to use public money on referendums. Three councils in Somerset - West Somerset district, Taunton Deane borough and South Somerset district - wanted the Electoral Reform Society to carry out a postal referendum of the electorate. But the district auditors warned that this could be going beyond the law and they might seek a judicial review of the decision to hold such a poll. The councils backed down, particularly as time for consultation was running out.
The 1986 Local Government Act restricted the role of councils in promoting their views to prevent them using public money for party political purposes.
A spokesman for the Commission said: 'The legal position of councils is extremely grey. The law says that councils can mount campaigns to their electorate if they are informative, but not persuasive. We are producing new guidelines because of the way councils are spending their money in the course of the local government review.'
The lobbyists GJW are being used by 20 councils, although these are group rather than individual contracts. For example, they have acted for historic cities such as Oxford, Norwich, Carlisle, Gloucester, Lincoln, York, Exeter, Worcester and Canterbury.
Paul Barnes, of GJW, said: 'Our role is to keep our clients fully aware of policy movements within the review, how it is changing and how they should respond. We advise them what to do at the local level, and we put the case ourselves to Government.'
He said GJW had warned councils against over-promoting themselves, which it said would only antagonise the Commission.