"Local governments are never that model enterprise. In fact, they rarely resemble each other. They have to provide a huge range of services without much control over revenue, their metrics of success are as varied as the communities they serve, and they have the huge pudding of legal responsibilities that comes from spending public money."
I wonder. The legal responsibilities are defined. Admittedly we have a strange way of slicing up the responsibilities between tiers in different ways in different parts of the UK and the devolved governments will have come up with their own ideas for additional responsibilities. Nevertheless the statutory duties have to be performed at some level.
It ought to be possible to write a function to implement each of those responsibilities. The different structures could just mean that the top tier here runs the function that's handled by the bottom tier there. Providing that the software is structured so that the total functionality can be allocated as required it ought not to be a problem provided it's designed that way.
It should be possible to have one or preferably two companies providing a modular applications suite for the core local government functions and central government mandate that they use one of them.
I'm sure one of the problems is individuals building their own little empires - Bob always handles street repairs but Alice is responsible for utility permits to dig up dig up roads except for gas because Fred's department inherited that from the municipal gasworks. It may well be that the a lot of the customisation requirements arise from just that sort of internal slicing. A mandated application suite might sort out a lot of that - optimise the responsibilities to fit properly structured software rather than pay to have the software customised to fit the egos of the departmental viceroys.
And handling those one-off huge capital projects? Well, do they expose taxpayers' money to excessive risks? Are they really things local government should be doing? That's a matter for which software support is a secondary consideration.