Some local authorities have made a positive response to the recession but many are ill-prepared for the austerity to come, according to an Audit Commission report on how councils are responding to the downturn.
The report acknowledges that there are limits to what local authorities and local service providers can do in the face of a global recession. "They may not be able to invest on a big enough scale to make a difference," it says, "and their own financial pressures may require them to make redundancies".
In addition, 40% of councils think their powers are limited and that this is a barrier to doing more - although the commission says local authority powers are "extensive".
The report says councils should be getting ready for the social consequences of the downturn, including unemployment, greater demand for benefits and welfare, help with debt, domestic violence, alcoholism, drug addiction, mental health problems, fly-tipping, abandoned cars and stray dogs.
Jobs are already being cut in local government: redundancies have begun in nearly half of district councils and almost a third of all councils have made posts redundant.
The commission says most councils have taken sensible, low risk steps to support businesses, help labour markets and support vulnerable households, but expect their impact to be modest.
It acknowledges that EU law prevents councils from favouring local firms, but says they can specify requirements that will increase the chances of jobs being created locally, such as specifying minimal travel impact.
Some councils have been more ambitious and have coherent action plans agreed with their local partners, including tailored interventions to support important local employers. These can be effective, but risky, says the report.
The commission wants councils to avoid complacency and ensure they fully understand their local economy. It also wants central government to assess national schemes in the light of local knowledge and to design simpler schemes, able to address local issues more quickly.
