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As I write this, ‘Tumultuous Thursday' on the world's capital markets has just given way to ‘Freaky Friday!' The stock market may have roared back, but there is a real sense of fragility about the overall economic outlook and a common view that whatever may happen in terms of short-term market swings, we face a sustained economic downturn. Many of us grew up in an era where it really was ‘the economy stupid'. Britain's economic underperformance, levels of unemployment and what the Americans call ‘pocket book' issues, dominated the political debate. We have, of course, been through a period where that has not been true to anything like the same extent. Now, it appears, the old preoccupations are back. For councils, that does not mean questions about how we help develop communities which are safe, healthy and cohesive are now less important. It does mean, however, that the part played in helping communities be more economically prosperous becomes ever-more important. It is also the case that the wider economic picture has a very direct bearing on the ability to secure objectives such as environmental sustainability, safer neighbourhoods and a healthier population – often negatively. It is not to minimise the important leadership role of councils in the area of behavioural change to suggest that the credit crunch, and all of its associated consequences, will have a more profound ‘nudging' effect on citizens' actual behaviour than anything an authority can do. The wider implications will be significant, too. The retreat of developers and house-builders from schemes critical to local regeneration and housing need, the decline in the value of land assets, the impact of changes in people's personal wealth on eligibility for social care, or their ability to pay their council tax, as well as dealing with some of the consequences of higher levels of homelessness and home repossessions, are just some of the examples of where councils will be challenged. No-one can be sanguine about that, not least given that all of this will impact on councils' own resource bases. In London, for example, 28 of our 33 councils are on the funding floor. It is the case, however, that councils have, many times in the past, played their part in both helping local economies to prosper as well as dealing with some of the consequences of local downturn, decline and failure. It is a vital part of the leadership of place. We should continue to argue for the flexibilities and resource that would allow us to do it better, but it won't stop councils doing all that they can to fulfil the role again.

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WHITEHALL

Plugged In

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