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Financially, politically and socially the next eighteen months are pivotal for public services, especially those delivered locally.

As I argued in a post late last year, public sector policy makers, leaders and managers must use the window of the next eighteen months to make significant productivity gains so they are in a better position to cope when the big funding squeeze starts in 2010. The economic downturn will put new pressures on budgets, not just from rising demands on services but also falling returns on investment and reduced income in areas ranging from town centre parking to recycling. But, as David Brindle points out this morning, these effects are more than countered by what now looks like a pretty generous settlement; local government will be getting an uplift of 4.2% in 09/10, three times the probable rate of inflation. Brindle also echoes the point made on Sunday by Transport Minister Andrew Adonis that rising unemployment should make it easier for public services to recruit talented refugees from the private sector.

Socially, the downturn means public services will become more vital to more people. Most obviously this is about protecting people who are losing their jobs or homes, and trying to maintain morale and social infrastructure in communities suddenly facing a business failure - for example, those areas of the Potteries that have been hit by the collapse of Waterford Wedgewood. But it also means councils making positive interventions when the market fails; initiatives like Essex Council’s funding of community post offices or the attempt by several councils to address the shortage of bank credit by creating their own banking services.  Indeed, just as the downturn makes local public services more important, councils are also enjoying new responsibilities as the Labour Government’s commitment to localisation takes concrete form. From post-16 provision to welfare to work to social housing, councils have new opportunities not only for local discretion but also to develop genuinely strategic responses.

How councils respond to these new powers and responsibilities could be very politically salient. David Cameron has made it clear that scepticism about the state will be a major plank of the Conservative critique of Labour’s recession plan. The Tories, their sympathisers in the media and think tanks like the very savvy Taxpayers' Alliance will train an eagle eye on any examples of public sector profligacy, and there are bound to be plenty to choose from. On the other hand, Labour will talk up the role in protecting people played by the state, including some very entrepreneurial and ambitious Conservative local authorities.

The media agenda is always unduly influenced by the personal experiences of journalists. Often in the past this has played into complaints about middle class tax levels. But now more and more journalists will have friends having to rely on the state themselves – in the last month I have read two heartfelt columns in national papers by unemployed professionals horrified at their treatment by Jobcentre Plus. The recession could make more privileged people understand the importance of the state – it could also strengthen the consumer critique of the public sector as a service provider.

So, all in all, a vital eighteen months ahead. We need to be seeing powerful leadership and advocacy from peak organisations representing key parts of the public sector. One such is the Local Government Association. The one and only time I have failed a job interview was for Chief Executive of the LGA - I was backed by the Conservative members of the interview panel but opposed by the Labour ones! Given the joys of being RSA Chief Executive and the news that the person who beat me to the job has now been forced out by his political masters, it looks like I had a lucky escape. In fact, the LGA has clearly improved its research and communication in recent years, but there is an even more vital need for its voice - and that of other public sector leadership organisations - to be heard over the next eighteen months.


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