Prime minister, David Cameron, has acknowledged that local government has been more effective at delivering public savings than Westminster – but warned controversial pension reforms were still ‘essential’.

In the first speech ever by a prime minister to the LGA conference, Mr Cameron admitted councils were presented with a ‘tough financial settlement’ last year, and were ‘grappling with difficult decisions.’ He warned there would be ‘many more tough decisions in the months ahead’.

He continued: ‘Yes, we want to give you more powers, but it doesn’t mean there shouldn’t be a frank exchange of views between us. I’m happy for you to turn around and tell me when you think we’ve been wrong and for me to do the same – although I don’t want to lock horns on an ongoing basis. In this new world of council power, I want a new relationship between central and local.’

Following criticism from councils that Whitehall has often been slow to deliver public savings, the PM acknowledged: ‘Local government has been better than central government at being efficient and giving value for money.’

But the main focus of Mr Cameron’s speech in Birmingham was public pension reforms.

Speaking after news that Local Government Pension Scheme talks would be held separately from other public sector pensions discussions, Mr Cameron insisted an overhaul of the retirement payments was still ‘essential’. He added: ‘The public sector pension system is in danger of going broke. In the 1970s a civil servant retiring at 60 would claim a pension for 20 years. Now it’s 30 years.

If we live longer, we should work longer.’ He said the Government’s proposals were ‘fair on the taxpayer’ but added that proposed changes still meant public sector pensions were the ‘best available.’

In his interview with The MJ, communities secretary, Eric Pickles, explained the coalition’s rationale for agreeing to local authority and trade union demands for the LGPS to be treated separately. Unlike all other major public sector pension schemes, the £130bn LGPS is a funded scheme, with a pot of assets invested to generate higher returns.

‘It should be treated separately. It’s 10% of the stock market – and you can’t really mess about with that,’ he said. Brian Strutton, national secretary of the GMB union representing local government staff, said: ‘I’m pleased that the Government has listened and I expect our first LGPS meeting will be in the next week or so.’

But he warned LGPS negotiations should include local government employers and DCLG ministers, who have so far been absent from talks co-ordinated by the Cabinet Office.