Speaking at a conference last week, it struck me what a transformation local government may face over the next few years.

The discussion centred on income-generation powers for local councils. Traditionally, when we think about income generation, we consider the ability to generate fees and charges, collect fines and levies, and maximise grant income.

While these sources of income will remain, if we take a moment to consider the wider agenda, it is clear they will become less significant.

Current initiatives include the new homes bonus and business rate growth retention under enterprise zone proposals. These change the consideration of income from something at the margins towards a measure of the success of the council in developing its location.

Councils will begin to face a real decision about their target levels of growth and the income that will bring.

The new power of competence will add to the need to make strategic decisions about the fundamental shape of the council. Is the council prepared to accept the risks associated with wider trading in exchange for the additional potential income which could be generated for reinvestment in services and infrastructure?

If we add to these initiatives the possibility of the return of business rates and increasing use of co-payments, the size of councils will be determined not by the level of resources they are allocated by central government but their own decisions as to the role and influence of the council in their local economies and areas.

There would once again be the opportunity for councils to become the great municipal forces that they once were, having real power to determine the destinies of their communities.

Alison Scott is assistant director for local government at the Chartered Institute of Public Finance and Accountancy