He slammed complex and time-wasting bidding procedures and specific grants - telling councils how to spend their money.
'We thought we had seen a glorious new dawn when Labour came to power. Three years on, it's more like being shot at dawn.'
In his speech to the LGA conference in Bournemouth today Mr Foster pressed for new government concessions on Freedom of Information for local councils.
Mr Foster detailed a six-point plan for the revitalisation of local government:
1. The government must fulfil the commitment given when they ratified the European Charter of Local Self-Government, enshrining council rights in a permanent constitutional settlement.
2. In the medium term, aim to allow councils to raise 45% of their funds through local income tax, with corresponding reductions in central taxation.
3. Introduce proportional representation for council elections, and end 'one-party state' local authorities.
4. Allow local residents to decide how their council should be structured, instead imposing a 'top-down' Whitehall model.
5. Reject Local Government Bill proposals to allow councils to operate in secrecy behind closed doors. Open all councils to public and the Press.
6. Transform the regional development agencies into full-blown democratically-elected regional governments, with powers to vary tax and to introduce secondary legislation.
Mr Foster's full speech follows:
[You thought you'd got rid of me!]
Your conference has chosen to take as its theme 'Tomorrow's Council' .
Such a title implies that the LGA believes that local government in this country actually has a future.
Sadly not everyone appears to agree.
During 18 years of Conservative government, local councils were increasingly sidelined, and more and more powers were given to Secretaries of State.
The funding regime got tighter and tighter, with some councils in a permanent 'cuts' regime. Council spending budgets were capped, Council assets were sold off, and Council services taken over by private contractors. The more Conservative and other councillors protested, the more powers were taken away from them.
Nowhere was this more striking than in education.
Like many of you, I fought again and again against the Tory's government's determination to remove schools from local democratic accountability.
Like many of you I opposed Grant Maintained Schools and City Technology Colleges.
Like many of you I opposed the dismantling of local education authority advisory services. I was right to do so. Now local authority advisers spend much of their time bidding for Ofsted inspection work to help balance the books and have little time to serve their own local schools.
Wilful damage was done to the schools admissions policies of LEAs - perhaps best typified by the nursery voucher scheme.
I recall moving Liberal Democrat amendments so that GM schools could 'opt back into' the local government fold. Eric Forth, then a junior Education minister, told me that this was a nonsense: the Tory plan was that there would be no LEAs for such schools to opt back into.
Then - a glorious new dawn of New Labour; radical, centre-left, a reforming, modernising government. 'Bliss was it in that dawn to be alive..'
Three years on, it's more like being shot at dawn.
What's happened ? Let me start with education.
Grant-maintained schools and CTCs were not returned to the LEAs; they've become Foundation Schools and remain their own admissions authorities.
An unelected Adjudicator is appointed to overrule the elected local authority on school organisation and admission matters. So what if local people object to his decisions ? There is no appeal against his rulings.
Despite all our attempts to read David Blunkett's lips, selection in schools has not only continued under this Labour government, but increased - under the guise of selection by aptitude - irrespective of what the electors in any local authority area may want.
Schools and even whole LEAs are being farmed out to private consortia.
And just yesterday - as the Learning and Skills Bill passed though the House of Commons - a further nail in the coffin of LEAs - the establishment of City Academies.
These go FAR further than anything I proposed for the Liberal Democrats with Neighbourhood School Trusts. And anyway, I lost.
City Academies will be private sector run, have their own curricula, be allowed to select 10% of pupils, can use their own pay and conditions arrangements, do NOT have to take disruptive pupils from other schools (as LEA schools have to) and will be directly (and more generously) funded by central government.
They are NOT part of the LEA. The government admits it. They describe them as 'independent schools'!
They're GM schools and CTCs rolled into one.
It's probably being over generous to say that the government is - by default -dismantling LEAs. It seems more calculated than that.
After all - with City Academies, CTCs, Foundation schools and others outside the LEA ambit - local authorities will be seen, more and more, to be responsible solely for those schools perceived as 'second class', a safety net for the socially excluded.
Of course the government can argue that they are merely responding to the perceived failures of some parts of local government to raise standards in schools over many years.
And maybe some councils have been too complacent.
But there is another way. Yesterday, Islington Council published the report of its new Education Commission.
The commission was set up to develop an overall vision and strategy for achieving radical improvements across all of Islington's schools.
It proposes an approach based on co-operation rather than competition. All schools working together - sharing best practice - led by a single academic board drawing on expertise from local college and university staff as well as those working in the schools.
It is an exciting and radical plan. It is one LEA's response to the need to raise standards dramatically and recognises that 'every child matters'.
Given the current government's attitude, if LEAs are to survive all will have to engage in the sort of radical thinking that's taken place in Islington.
But it's not just in education that I have fears for the future of local government.
The local government funding fiasco remains unresolved. Labour minister Hilary Armstrong admits: 'For the electors to whom it matters most, the system is virtually impenetrable. I am deeply unhappy at having to explain a system that is flawed.'
For three years we've waited for new proposals. They haven't even got round to producing a Green Paper.
The latest local government financial settlement - perhaps better than some expected - still left local councils over£1 billion short of the funds needed to maintain existing services.
To make ends meet councils had to increase Council Tax, on average, by over 6%. Additionally services were cut and service charges increased.
Take just one morbid example. The local authority right of burial fee has increased by 18% since the general election. Cremation charges have risen 20%. At least, for once, Labour is favouring composting above incineration !
To further undermine local government, an increased share of the government's pot for local government is passed on in the form of specific grants - councils are told more and more what to do and what to spend their money on.
And even worse, very often councils have to bid for the funds. Tens of thousands of bids have been submitted. Days and weeks of member and officer time have been consumed in producing them. And yet only one third have been successful.
It's unfair, it's wasteful and it's just one of far too many centralising tendencies of a Labour government from whom much more was expected.
But it's even worse. Next week, I'll be publishing details of the proliferating spending patterns of the numerous government initiatives intended to promote regeneration; many in which your councils play a role.
It's not a happy picture; under-spent funds, lack of co-ordination between initiatives with overlap and missed opportunities, funding arrangements which give rise to widespread uncertainty and unmet expectations and a huge bureaucratic quagmire.
The trend of taking powers from local government into the hands of Whitehall Ministers continues unabated. Now they're even telling councils how they must organise themselves.
My concerns about the government's attitude to local government are shared by many others. Labour MP Austin Mitchell - writing earlier this month about Labour's local election results - said:
'Labour councils are our front lines. We've treated them as the enemy within, penalised them, squeezed them, and then forced them to cut spending and increase Council. Then shot them in the back as they went over the top for us.'
At least we expected a Labour government to know what they wanted to achieve. But I'm even having my doubts about that.
Already they've had to table over 500 amendments to their own Local Government Bill to cope with mistakes, omissions and changes of heart.
They're obsessed with target-setting. They set the targets - not local people. They get headlines in the Mail and the Sun about 'how they're getting tough with Town Halls' . Then - bizarrely - seem to forget about these apparently vital targets !! -In a fascinating parliamentary answer to me [2nd December 1999] Beverley Hughes MP said,
'Details of any targets agreed with local government are not held centrally'!!!
Having got everyone in the Council offices in a flat spin, they then consign the targets to the dustbin.
Perhaps that is the best place for them. Our Party's research showed that a staggering 4,585 targets have been set by the DfEE alone since Labour came into office.
This is the government that said: 'Ministers do not want target-setting to overburden schools.'
No wonder Charles Kennedy called last night for all this to be replaced by 'one individual plan, set for each individual pupil.'
Target-setting, and the endless launching of initiatives, are all to do with getting the quick headline; giving the appearance that the government is acting. So are the attacks which ministers launch from time to time against local authorities.
I think we could safely say that despite all the faults of local government, you are more spinned against than spinning.
We could perfectly well have a future; a - good, democratic and radical future- for local government. But to guarantee that, we need some radical changes.
Two years ago the Labour government ratified the Council of Europe's Charter for Local Self-Government. The Charter sets out the relationship between central and local government. It guarantees the rights of local government as part of the nation's constitution.
So, first, the Government must now make it clear - unequivocally, once and for all -that they accept that their ratification of the Charter enshrines the rights of local government in a permanent constitutional settlement.
Second, we need a significant change in the way local government is funded. More of the money spent locally raised locally. We need to cut taxes nationally, and raise them locally. Money is power; where the cash is the power is.
Currently, the proportion of council funds raised locally is about 18%. In the medium term we should aim to raise it to 45%. Our ultimate goal should be that local government raises 80% of what is spent locally, with an off-setting reduction in national taxation.
And, in addition to raising more funds locally to spend locally, we should move to local income tax as a much fairer and more accountable way of raising local taxation.
As part of the change we should restore local control over business rates. It is true that local business communities worry that if this happens, local authorities will sting them instead of the voters. So there have to be guarantees built in to a new system to deal with that fear.
Third, we should have proportional representation for local government elections. Fair votes so people know that when they cast their vote it really can make a difference.
'One-party state' local authorities are a recipe for inefficiency and corruption. 55 authorities have had the same political control for 20 years.
A Mirror editorial put it very well earlier this year: 'This Government wants to reform the voting system, for the European Parliament, and probably, Westminster, too. It should do the same for council elections so no party can ever totally dominate for years. That is how to clean up local government.'
Fourth, we cannot have the government spelling out the detail of how local authorities should structure themselves. Local councils are not the wholly-owned subsidiaries of central government. They belong to the people in their localities. In the words of my Party's policy document 'Re-inventing Local Government' [which I commend to you] Councils should be 'competent, powerful, and free.'
Many councils do need to streamline decision-making. But some councils have already radically altered the way they make decisions without legislation to force them.
It is for the people in the localities to choose which structure for their local authority best suits their needs.
Fifth, local authorities must not operate in secrecy, behind closed doors. Along with a fair voting system, this is a key protection for the public against corruption. It is a guarantee of access for the public and the Press, and of open debate.
Liberal Democrats and many others fought hard in local authorities up and down the country during the 'dark ages' to open up councils. They fought for meetings to be in public, for the public's right to speak or present petition, for papers to be available to all councillors and to the public and press in advance of meetings.
Now, in the Local Government Bill, the Government currently says that new executives can - if they wish - meet in secret; taking us back to the Dark Ages.
We shall be pressing the Government very hard now for significant concessions on the Freedom of Information provisions in the Local Government Bill. I have every confidence that we are very close to breakthrough in that area.
Sixth, we need to transform the appointed Regional Development Agencies into full-blown democratically-elected Regional Governments, with tax-raising powers; the Scottish Parliament model, not the Welsh Assembly model.
It would obviously be sensible to begin debate on the areas to be considered for the new regional governments on the nine English regions that were defined for the regional government offices, the RDAs and the regional chambers. Any border disputes can be settled over time without the involvement of a United Nations peace-keeping force (though I accept Cornwall might need them).
What is certainly true, is that arguments over boundaries absolutely must not be allowed to kill the concept of democratically elected, devolved regional government.
At present the RDAs, despite the best efforts and excellent work of the Regional Chambers, function like colonial outposts of Empire, relaying the dictates of Whitehall to a provincial people. Feedback from the RDA is to Whitehall, not to the people who depend on their decisions.
I was happy to welcome the initiative announced by John Prescott, Gordon Brown and other ministers last week giving RDAs a much stronger role in economic development.
However, it's rather odd that the Deputy Prime Minister and the Chancellor of the Exchequer, in calling for action to level up the regions, are trying to solve a problem that the Prime Minister says does not exist. Tony Blair, you will remember, insisted that there was no North-South divide.
Any additional funds for the regions are welcome, from the EU or elsewhere, but what the RDAs need most is flexibility. At present they are tied up in Whitehall's red tape. They need to be more fleet of foot.
But it's not just the RDAs. At present a whole alphabet soup of quangos provides or administers or advises a variety of services. These include economic development, environment, transport, planning, further education and training, as well as the arts, sport and tourism. They have a fascinating variety of overlapping boundaries that would be funny if it weren't so serious.
The majority of these organisations should be brought under the democratic control of regional governments, with common boundaries. Joined-up thinking at regional level, at last.
But the crucial issue is the current democratic deficit. We need regional government - drawing powers down from Whitehall, not up from local government - responsible to local people and not to the Secretary of State.
A regional government worth its salt must be able to negotiate directly with the European Union on policy matters as well as grant applications.
I'd like to see every regional government with its own office in Brussels.
It is often objected that with a new tier of elected regional government, we would have too many tiers of local government. That is obviously of crucial interest to this audience.
I have to say this: Liberal Democrats believe that local people should decide, not central government. Do they want unitary authorities ? Do they want to retain district and county councils ? How much power and tax-raising ability should regional government have ? Let the people decide.
No community should finish up with a democratic settlement that it doesn't want, let alone one which is imposed upon it.
Above all, we must not approach this project with fear and circumspection. It is time to campaign for it, argue the case and make sure that our demand to end the democratic deficit is heard and acted upon.
But, while arguing for powers to be devolved down from central government, what about powers down from local government itself; to town and parish councils and to area committees ?
Willingness to devolve powers is a sign of trust in local communities; a sign of strength, not weakness.
Local government, whether at principal or at minor level, can be hugely positive in bringing together partners in their neighbourhoods and contribute to successful management of neighbourhoods. All have a part to play.
Such partnerships are particularly useful for regeneration projects where for example getting agencies, community groups, councils and others together to improve housing stock, community safety, health and social inclusion can make a real difference.
But this leads me to my seventh and very final point; community involvement.
I do not believe that the role of local government is just to follow the sometimes transitory whims gleaned from focus groups and opinion polls. Local government should lead.
But much more effort must be made by all local councils not just be more open - but to be more consultative and involving.
There is a wonderful opportunity provided in Part 1 of the Local Government Bill. If we can persuade the Government to sort out the funding issues surrounding the new power of well-being, local councils will have a significant opportunity to become real community leaders - working with and for the people they serve.
Part 1 of the Bill could truly be the saviour of local government.
But, -and here I return to my main theme - if local government is to become more innovative, as it must be to have a useful and worthwhile future, local authorities must be allowed much more freedom and flexibility from regulations and Whitehall rules which restrict them.
Much of the hostility of central government to local government, over many years, has come from poor performance, from mismanagement and at times even from corruption.
It has come from distorted perceptions about 'loony Left' councils filtered through a hostile Press.
It came from a Tory government anxious to gain 'street-cred' by tackling such councils; it now comes from New Labour anxious to free itself from the alleged bad reputation of some so-called 'Old Labour' councils.
It is therefore very heartening that the LGA for its part in its key messages is saying that local government is 'serious about improvement' and that 'poor performance is not acceptable' and moreover that local government does have the infrastructure in place to tackle failure.
Your commitment to focussing on the needs of customers and citizens, and to being open to working across boundaries is surelyright.
Above all your willingness to campaign for an agenda which addresses the importance of councils fully engaging with their communities has the potential to build a secure and worthwhile future for 'tomorrow's councils'; councils which, as Liberal Democrats believe, should be competent, powerful, and free.
So the message to central government, whichever party is in power, is simple:
'Get your tanks off Town Hall lawns.'