Andy Sawford’s thoughts on what lies ahead for local government in 2012

This post was first published by Public Finance.

Crystal-ball gazing about what 2012 holds for local councils is not an exact science. But we can be sure of one thing – the going will get even tougher

Looking beyond Christmas can be gloomy. January is the month of diets and abstinence, dark days and cold nights. But what lies ahead for local government?

Budget-setting will be well advanced but final decisions and public consultations will still need to be made. I predict a spate of Daily Mail headlines and criticisms by ministers of councils that opt to increase council tax. Last year, all councils took the government’s deal, partly because their ‘base’ was compensated in future years. This year, the deal isn’t quite as good.

Financial considerations will dominate as councils implement service cuts and transformation programmes. Community Budgets will come to the fore as the government’s pilots prove that we can get more bang for local spending by connecting up budgets and services.

Police commissioner elections and mayoral referendums will be a distraction of limited interest to most people. There will be exceptions, such as in Birmingham, where pro-mayor campaigning is already under way. The big Boris versus Ken re-match will dominate headlines as the London-centric media again become obsessed with these two unique political characters. Boris is the favourite to win but bookies, who are more reliable than polls, predict it will be close.

Across the UK, 185 councils have elections, including all those in Wales and Scotland. This means political change for many communities. Much political significance will be read into this and Labour leader Ed Miliband and Communities Secretary Eric Pickles particularly will be judged on the outcome.

Pickles will probably move on anyway as the prime minister conducts his first major reshuffle. Eric is valuable to the Conservative top team so he will almost certainly get another major role, perhaps a return to Tory HQ as party chair, to lead the fight in mid-term parliamentary by-elections, and  prepare for the next general election.

Greg Clark, the urbane minister of state and a Number 10 favourite, would be the preferred successor by many in local government. Others might include Grant Shapps, Philip Hammond, Caroline Spelman and Chris Grayling.

The Olympics will dominate many towns and cities as they prepare to host visiting teams and tourists. Safety will be a big concern, particularly following the summer riots. Darra Singh’s report on the disorder will draw attention to the myriad causes and effects. I’ll predict now, with my fingers crossed, that there will not be a repeat in 2012.

However, some of the underlying problems are going to get worse. Youth unemployment is more than a million but the initiative announced by Deputy Prime Minister Nick Clegg aims to reduce this from April. The government will also be pinning hopes on the new Work Programme.

The real challenge is job creation. Growth is at the top of the agenda, and  initiatives and incentives will begin to flow through. However, given the scale of job losses in the public sector – which the chancellor now says will total more than 700,000 – things could get worse before they get better if the private sector remains sluggish.

The crisis in the eurozone looks set to continue and bold action will be needed to stop contagion. Closer to home, many more council workers will find themselves redundant, while others will retire, taking their pension while they can. The pensions dispute will rumble on and further industrial action is likely.

The Localism Act provides  opportunities for councils and citizens. Some will rush to use the new General Power of Competence while others will wait and see. The new planning system will kick in along with major changes in housing and housing finance.

All of this will combine to make it perhaps the busiest year ever for local government. It’s going to be hard. But there is no doubt that local councils will rise to the challenge.