Financially weak councils will go bust and others will be forced to drastically reduce services to cope with cuts to town hall budgets outlined by ministers on Wednesday, local authorities have predicted
The warning came after the government revealed that councils in England would face spending reductions of up to 8.8% from April, with an average cut of 1.7%. The communities secretary, Eric Pickles, described the settlement as fair and said the onus was now on councils to do more to cut costs and pursue "sensible savings" to protect public services.
But local authorities across the political spectrum have warned that they have already made billions of pounds of efficiency savings and the current trajectory of cuts is unsustainable.
Pickles published a government document outlining 50 ways in which councils could save money, including scrapping the post of chief executive, cutting translation services by printing official documents in English only, opening coffee shops in libraries, and banning the provision of mineral water at council meetings.
He said: "Councils that put their thinking caps on now can save precious taxpayer pennies next year by cutting out waste and transforming frontline services that vulnerable people rely on."
Labour said Pickles was in denial over the impact of cuts on local people, who would see services from libraries to Sure Start centres disappear. It claimed councils in deprived parts of the north and Midlands would be worst hit.
The shadow communities and local government secretary, Hilary Benn, said: "It is clear that [Pickles] is living in a world of his own because he simply does not understand the impact that his decisions on funding are having on the services and local people who use and rely upon them."
Seven of England's biggest cities have warned in a letter to Pickles that councils face a "looming financial crisis" with many reduced to providing a skeleton service consisting of social care and waste disposal by the end of the decade.
The leaders of Liverpool, Newcastle, Birmingham, Nottingham, Sheffield, Leeds and Manchester local authorities say the scale of the expected cuts imposed by ministers means that vital services will no longer be able to be protected.
The government has unveiled a new funding mechanism for local government which will mean councils retaining a higher percentage of the business rates they collect. Pickles said this gave them an incentive to attract more businesses to their areas. "Striving councils now have a chance to go full steam ahead and grab a share of the wealth for their area," he said.
He said all councils had a moral duty to freeze council tax bills in 2013-14, and those that decided to raise council tax above a 2% threshold would have to submit to a local referendum.
A recent survey by the Local Government Chronicle suggested that over half of authorities, many of them Tory-controlled, would ignore Pickles and increase bills next year.
The communities secretary announced that local councillors, including full-time cabinet members, would in future be no longer able to become part of the local government pension scheme, a move that would save £7m a year.
Labour said that this exclusion did not apply to elected mayors, so politicians such as London's Boris Johnson would continue to be able to benefit from the scheme.
Joanna Killian, chair of the Society of Local Authority Chief Executives and Senior Managers, said: "This settlement will increase the risk of more councils being financially unviable … very difficult local choices will now need to be made and local government should have the freedom to make these choices, even when setting council tax."
Last week West Somerset district council examined the possibility of making most of its staff redundant after an internal report saying that government funding cuts meant it was "not viable" in the long term.
Heather Wakefield, Unison's head of local government, said: "Local councils are already under the government's financial cosh and today's cuts will push many more vital services over the edge. Ministers are out of touch with the lives of ordinary people and the day to day experience of those who rely on and deliver our public services."
Phil Holt, local government advisory partner at Deloitte, the professional services firm, said most authorities had already made a range of efficiencies and cuts, but still faced "some of the greatest challenges in living memory".
He added: "Some councils will struggle to maintain their statutory responsibilities whilst others will simply see the level of service provision drop significantly."
Kate Hollern, leader of Blackburn with Darwen council, forecast that her council would see its budget fall by £27m, or 20%, in April: "These cuts come on top of the pressures and new responsibilities being heaped on us by the government's reforms of welfare, education and health. The very role of local government is under threat."
