Local authorities should be prepared to use referendums to test public support for making difficult decisions about spending cuts, former Audit Commission chief Steve Bundred told The MJ Future Forum.

He told chief executives: 'What's wrong with asking the electorate to decide on serious decisions? Local government is not good at explaining difficult choices. If it was better it could find public support for its difficult decisions.'

In his session on the lessons from municipal bankruptcies in the US Mr Bundred warned that public sector pensions were central to the councils going bust, adding: 'In the UK we still have dificulties long term with public sector final salary pensions.'

He said that core to a city avoiding bankruptcy was strong leadership and a focus on regeneration.