A raft of services and job cuts are on the cards unless councils can find more than£1bn worth of savings over the next three years, according to the Local Government Association.
Inflation alone means that government funding to councils over the next three years is currently worth almost£500m a year less than originally intended and this has been exacerbated by rocketing commodity prices,
Other factors contributing to the funding deficit, according to the LGA research, include a fall in income from a range of other services that councils charge for, such as leisure centres and the tumbling value council assets such as land and buildings.
See the LGCplus analysis 25/09/08
LGA chair Margaret Eaton (Con) said: “As inflation rises, the amount that councils can buy with their money shrinks, just as it does for hard-pressed families, meaning that the money town halls have to spend on vital local services won’t go as far.
“In real terms, councils are now receiving almost£500m a year less government funding than was planned in last year’s comprehensive spending review.”
She added: “Sound financial management and efficiency drives over the last few years have left councils well placed to get through the financial problems that the whole country is facing.”