Chancellor Gordon Brown has set out five Treasury objectives in which he sees councils playing a key role, and which are likely to form the basis for the first set of joint central/local priorities.
The Local Government Association wants the priorities, promised in the local government white paper, to be the main plank of the evolving central/local relationship.
Mr Brown's priorities are:
- Full employment
- Raising productivity to match European competitors and raising living standards
- Eliminating child poverty
- Tackling pensioner poverty
- Renewing public services, from transport and housing to health and education.
He gave explicit examples of the part councils will play in meeting these objectives, such as through the creation of supplementary employment programmes to complement the New Deal.
Given the Treasury's lead role in drawing up local public service agreements, it is likely the final set of priorities will reflect Mr Brown's list.
The LGA wants the priorities to reflect the six pledges it launched after the election. These focused on children, schools, employment, the elderly, transport and the environment.
Association chair Sir Jeremy Beecham (Lab) said: 'The priorities will set the
agenda, and not just in the sphere of local government. What's important is that this is going to be a cross-government exercise.
'It won't just be local government signing up to something. It will be government in all its manifestations signing up.'
Crime, community safety and public health are contenders for the list. Once agreed, they will lead to between six and
12 national local PSA targets, replacing those taken from central government PSAs.
Mr Brown called for a new era of trust in central/local relations: 'Our priorities can't be met if we stand apart from each other.'
'Building greater trust between local and central government, and between elected representatives and the public they represent' were the 'twin challenges' facing central and local government, he added.
He signalled a willingness to go beyond the white paper's freedoms: 'I believe these are only the first steps in expanding our partnerships. We're ready to do more, combining more flexibilities and more resources in return for more reform and better results.
'We should be prepared to consider further radical options to ensure devolution of power and responsibility go hand in hand so the public gets the best possible service.'
For example, he would consider 'how, within the new prudential borrowing regime, we can engender more freedoms'.
He indicated the working group set up to review the funding would pay more than lip-service to the issue: 'We're ready to see if a better regime can be worked out. That will be the next stage in our relationship.'
But the chancellor, who is widely seen as determining how far local government
secretary Stephen Byers can fulfil his
commitment to decentralisation, said the freedoms would be developed 'over time and in stages'.
Sceptics say the Treasury is interested in PSAs because they permit it to exert more control over councils.
LGA Conservative group leader Gordon Keymer said the PSA targets were needed to allow the association to get more control over the process, in particular the Treasury.
He said: 'It's my view the main purpose of the priorities is to smoke out exactly what the government is prepared to give in the way of freedoms, flexibilities and funding.'