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Finance directors will be advised to make the most of the weekend, judging by the artillery bombardment coming out of the coalition government's spin machine. A combination of dire warnings about how the state of the public finances is even worse than predicted, coupled with rubbishing of public sector pay, pensions and ‘waste', suggests next week's Budget will not be exactly sparing of local government. But the pre-Budget propaganda barrage has been entirely predictable. Any new government will want to push as much blame on to its predecessor. And headline-grabbing assaults on public sector ‘fat cats' are guaranteed headlines, a bit like warming up the audience before a Roman gladiators' circus. Nor are there any surprises that local government may get a tough deal. If the coalition intends ring-fencing the NHS, education and defence, then it must turn to local services. Councils will get through the next difficult months as they have done on numerous occasions previously. The tide of fat cat coverage will turn as householders suddenly rediscover their liking for well-maintained streets, decent residential care for their aged parents, well-stocked libraries and manicured parks. In the short term, councils will manage the downturn in revenue spend. But of equal importance is the long-term scenario. So-called salami-slicing may deal with the 2011/12 budget, but what of the following years? In his article this week on page 16, the ex-chairman of London Councils, Sir Merrick Cockell, gives his view that having 33 London boroughs all producing their own services is no longer sustainable. Even apart from the procurement benefit of economies of scale, the costs alone will dictate more mergers. So far, the new administration at the CLG has dealt with the ‘low hanging fruit' of change – scrapping quangos, getting rid of the Standards Board, dropping spatial strategies and housing targets. It has yet to apply itself to the more complex and medium-term strategy of how to deliver the same public services on less against the rising costs of demographic change. Next week's Budget will provide that stimulus, one, as Sir Merrick has displayed, is already being seriously examined within local government itself.

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WHITEHALL

The impact of the Budget…

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