Local authorities in Wales are under huge pressure. We have not seen the Welsh equivalent of the 20-plus English councils that are teetering on the brink of bankruptcy. But, when researchers at the Wales Centre for Public Policy conducted a series of interviews with leaders from across the sector late last year, they found universal agreement that we cannot carry on as we are. Everyone thought reform was necessary but no-one was sure what it should look like.

Local government leaders to the west of Offa's Dyke face the same cocktail of challenges as their English counterparts. Councils that have already been hollowed out by years of austerity are expected to satisfy spiralling demand for services, tackle growing health inequalities, cope with an ageing population and mitigate the worst effects of climate change.

Can we create a long-term financially sustainable future for local government in Wales? If so, what might it look like and how can we get there?

As in England, there is no realistic prospect of any significant increase in real-terms funding to help with this. Throw in some hair-raising workforce projections and the future starts to look pretty bleak.

Can we create a long-term financially sustainable future for local government in Wales? If so, what might it look like and how can we get there?

To explore possible answers, the Wales Centre for Public Policy has convened an independent, cross-party working group of leaders and chief executives from authorities across Wales to try to develop a vision, or visions, for the future of local government.

Drawing on evidence from external experts from across the UK, we are starting with some fundamental questions:

What is the fundamental purpose of local government?

Do its current range of responsibilities make sense?

Can authorities really meet the future costs of big spending ‘people-focused' provision like social care, additional learning needs, housing and homelessness and still fulfil place-shaping and place-leadership roles?

How can councils free up time, funding and headspace for upstream preventative activities that help reduce the need for more acute services in the long term?

Is it time to consider giving up some services and what are the pros and cons of taking on new responsibilities (for example, for public health)?

Do we need to think again about how councils work together, make markets, and maximise their collective buying power?

Is there more we can do to work with communities to provide those services which need hyper-local solutions?

And, is there anything that can be done with the current funding and performance frameworks to free up local energy, innovation and ideas?

These are tricky challenges and they do not have simple solutions. Policy-makers have reached for one of three responses: reorganisation, restructuring, or public service reform. But it seems clear there is not much appetite for wholesale reorganisation of Welsh local government.

Few would argue that a country of 3.3 million people really needs 22 principal local authorities. But restructuring would incur huge transactional costs and could become a distraction from the real challenges facing our communities.

That probably leaves two main options: changing what councils do (restructuring) and/or changing how they do it (reform).

‘Liberating' authorities from the responsibility for social care, as advocated by a recent Demos report, might seem attractive to some in local government. It would certainly free them from the grim routine of repeatedly paring back non-statutory services to create the financial headroom they need to sustain acute services. But who will take on social care? Could they provide a better deal for taxpayers? And, more importantly, would they be able to safeguard the interests of vulnerable users?

Of course, there is always scope for public service reform and improvement. AI will streamline some business processes and make local services more accessible and effective for some – though not all – users.

Maybe we can also look again at pooling resources across local agencies. Is there scope for even more joint working between councils? But Wales already has a highly congested, probably dysfunctional, ‘partnership map'. Unpicking existing arrangements isn't easy and adding additional collaborative structures could make things worse.

There are no easy answers and what might work for one authority will not be right for them all. We think there is real value in trying to take a holistic view of the multiple challenges and seeing if it is possible to frame a coherent vision for a sustainable future in the run-up to the Senedd election next year.

It is still early days for the working group but we will be presenting some initial suggestions at the Welsh Local Government Authority's Annual Conference in June.

In the meantime, if you want to keep up with the work of the group, sign up to the WCPP newsletter at wcpp.org.uk/newsletter

Steve Martin was director of the Wales Centre for Public Policy (WCPP) and is the independent chair of the joint WCPP and Welsh Local Government Association working group to find sustainable solutions for local government in Wales