The first day in a new job is rarely easy but Margaret Eaton wondered what she had let herself in for when, on her inaugural day as the chairman of the Local Government Association last September, Iceland’s banks collapsed — taking almost £1 billion in council funds down with them.

“I realised that it was going to be a very challenging role,” she says.

But then, Eaton is accustomed to challenges. As the first female leader of Bradford Metropolitan District Council, she was in charge during the race riots of 2001, which involved violent clashes between police and youths: “If you wake up one morning and there’s been a riot in your city and the national media is there to meet you on the doorstep, you get used to surprises.”

There have been upheavals in-house, too. The LGA was still reeling from the sudden departure of its chairman, Sir Simon Milton, who left suddenly to join Boris Johnson, the Mayor of London, last July, when five months later its chief executive, Paul Coen, was suspended after tensions between the association’s executive and political leadership.

All the while, the LGA was facing public outrage at councils after the case of Baby Peter raised serious questions about the ability of social workers to protect vulnerable children.

But after the news agenda moves on, it is councils that are left to pick up the pieces of a battered morale.

“It isn’t something that you deal with when it is [in the news] and then forget about,” Eaton says. “The high profile nature of what happened to Baby Peter focused a lot of minds on what needs to happen.”

Confidence in social workers has plummeted, she admits: 60 per cent of councils are struggling to recruit. “Things like that do cause damage. But we all recognise that the worst thing would be for social work to become a ‘non-job’ because that exacerbates the difficulties.”

The LGA is working closely with the officials who conducted Lord Laming’s review of the Baby Peter case to look at how councils can better support social workers.

A seemingly unflappable operator, Eaton echoes the Obama Administration’s mantra of never letting a crisis — or crises — go to waste.

The MPs’ expenses scandal has damaged public trust in politicians, perhaps irrevocably. Yet the widespread disgust with national politics will play into the hands of local government, Eaton believes.

“Because of the turbulence in national politics, now is the ideal time for local government to come into its own. We are on the ground working with people every day and so much better placed to make a new relationship with the public, and with the electorate, to restore faith in democracy. The things that matter to people are the things that local government delivers,” she says.

All the major political parties promise to devolve power to let councils govern their areas as they see fit. Yet the past 12 years bear the hallmarks of a remarkably centralist government, obsessed with national targets and performance indicators.

“The centralist approach just hasn’t worked,” Eaton says. “All the parties are beginning to talk about devolution but the crucial thing is how it will appear; whether they allow local government to make its own decisions about spend and give them more freedom. One size does not fit all.”

Given that the Conservatives won control of 30 out of 34 councils in this month’s elections, would a Cameron-led government be more likely to relinquish power to the regions? Eaton, a Tory councillor herself, is unsure. “Any central government finds it difficult to let go and know that people have to be free to make mistakes.” The LGA is in talks with the main parties as they formulate their election strategy for 2010 to lobby for greater council powers.

“There’s always been this view that Westminister is the elite part of politics and anybody who’s achieving wouldn’t be in local government — which is absolute nonsense when you look at the size of budgets and the enomity of the task and the breadth of services.”

This schism has meant that MPs and local government have “not acted as partners in the past”, to the detriment of local services, she says.

It would be hard to imagine a year as tumultuous as the past, but the effects of the recession will be felt in town halls for years.

“Iceland was only one of the many financial issues. There’s the fact that local authorities now have, because of the recession, many more demands on their resources. They are losing income because people aren’t spending money on parking and leisure.”

As well as losing income, the basic services that councils provide — more than 800 in some areas — are stretched. People are needing services more than ever — debt counselling, social housing, free school meals.

To top it off local government was already the most efficient part of the sector having saved more than £3 billion since 2005 in response to government demands. The money saved has subsidised other parts of the public sector that have not met their savings targets, Eaton says. Now it is being asked to make further savings.

“It is a difficult balancing act, delivering better services when the expectation of the resources available is quite different from a year ago. We have to do things differently.”

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