Councils told they must expect massive budget cuts until 2020

Professor Tony Travers, a local government finance expert at the London School of Economics, told MPs that town halls would be “naive” not to expect their budgets to be slashed by another quarter after the next election.

The Local Government Association (LGA), which represents councils across England, said this would translate into cuts of around 80 per cent to those services which councils are not legally obliged to provide – such as museums, arts and leisure.

Since coming to power in 2010, the Coalition has already implemented the biggest clampdown on council spending in living memory, with more than £1bn slashed from local authority budgets in Yorkshire over the past three years.

Dozens of libraries have closed across the region, along with huge cuts to youth service funding and subsidies for rural bus networks.

But speaking before the Commons public accounts committee last night, Mr Travers said the Government’s failure to meet its pledge to remove the deficit by 2015 would mean more council cuts in the years that follow the next election.

“I must stress that although we have no public spending plans (announced) beyond 2015, when we do get them in the future they are going to repeat this right the way through to the end of the decade,” Mr Travers said.

“The reason for that is when the original spending review figures were set in 2010, it was expected that we would have got rid of the deficit by 2015. Now it isn’t the case, it will take much longer to reduce the deficit, and that in turn will mean this kind of pressure will have to continue. So it would be a naïve local authority that didn’t plan for cuts of another, say, 15, 20, 25 per cent in cash over the years to the end of the decade.”

The committee heard the main impact of the cuts will be felt in those services which councils are not legally obliged to provide.

The chief executive of the LGA, Carolyn Downs, said: “We modelled this for every single council in the country, and what that shows is... there is going to have to be about an 80 per cent cut in non-statutory services such as leisure.”

The Yorkshire Post revealed in 2011 that the Coalition’s first round of council cuts had wiped more than £1bn off local services around the region.

All 22 councils across Yorkshire are now drawing up further packages of cuts, after Communities Secretary Eric Pickles announced another bleak funding settlement for the coming two years. Local authorities in rural areas have complained they have been hit particularly hard, and are pushing Mr Pickles for a fairer deal.

Mr Travers agreed “small local authorities are likely to be exposed” as their budgets are reduced further in the years to 2020.

He said it was a “mathematical certainty” that, with Ministers committed to protecting the schools, NHS and foreign aid budgets, and with welfare spending still sky high, the axe would continue to fall elsewhere.

“We are only three years into a much longer period of reduction of local government spending, because of decisions that have been taken – and I understand why – to protect the NHS, to protect welfare, to protect schools and international development,” he said.

“Efforts to replace overall public expenditure inevitably fall on the rest. And so long as that set of decisions remains in place and the deficit needs to be reduced, it is inevitable this pressure will continue.”

Ms Downs said larger cities with high areas of deprivation will also be hit hard by Government plans to reward councils with high levels of business growth and house-building with extra funds.

“It’s not just small rural districts,” she said. “Where you have high level of deprivation, where you have a high level of dependency on grants, where your ability to raise income either through business rates or through council tax (is limited).... then that’s just as challenging, in my view.”