By Daniel Hunter

Millions of people are living in areas where their council will have to close children's centres, libraries, museums and sports centres, as well as slash pothole fixing budgets, increase bus fares and switch off streetlights between midnight and dawn, if significant new cuts to local government funding are made in the 2015/16 public spending round.

The Local Government Association, which represents more than 370 local authorities in England and Wales, has mapped the likely impact on local services if the next spending round were to deliver a 10 per cent cut to the funding an average upper-tier council receives from central government.

The "Anycouncil" modelling shows that residents living in a council area which sits in the mid-range in relation to current funding, levels of deprivation and outlook for economic growth should expect to see key local services dramatically reduced in 2015/16 and beyond unless local government finances are put on a sustainable footing. Millions of residents are living in areas where their council will have to consider similar measures.

The predicted impact on local services in the average upper-tier council is due to a combination of the sizable cuts to funding the Government has already implemented across the current spending period (2011/12 to 2014/15), the exhaustion of readily-obtainable improvements in efficiency and the rising demand for adult social care.

Anycouncil is already facing a 27 per cent cut in funding from central government. On top of this it has implemented a two-year council tax freeze. When combined with inflation and rising demand on services for vulnerable residents Anycouncil has had to reduce spending on non-care budgets by the equivalent of £64 million across the 2011/12 to 2014/15 spending period. A further ten per cent cut would mean the council would have to find another £30 million in savings in 2015/16. In order to achieve that cut it would have to reduce spending on a broad combination of non-statutory services which might include children's centres, museums, libraries and sports centres, as well as reduce road maintenance budgets, increase bus fares and switch off streetlights between midnight and dawn.

Local government as a whole, which is seeing its funding from central government cut by £10 billion in real terms across the current spending period (2011/12 to 2014/15), is facing a rapidly growing financial black-hole brought about by a combination of cuts and the escalation in demand for and the cost of delivering adult social care. It is predicted that by 2019/20, unless there is major reform of local government finance, the black-hole will be £16.5 billion. This figure represents the difference between projected funding and the predicted cost of providing the current level of services. Under this scenario almost all of councils' money would have to be spent on explicit statutory responsibilities like social services, waste collection and concessionary travel, meaning that the money available for all other services, such as libraries, road maintenance and leisure facilities would have been cut by 90 per cent.

The analysis shows that the current financial position of most councils is unsustainable in the medium to long term. Council leaders are warning that unless steps are taken to fix local government's current financial instability, councils will start to fail their communities. This is because they will no longer be in a position to provide key services which are every bit as important to the public as those provided by emergency services, the NHS and schools.

The LGA is calling on the Government to take a number of steps in the 2015/16 spending round to ensure vital local services are not placed on the endangered list. Among the most pressing is the removal, or at the very least adjustment, of ring-fencing from health and schools budgets. Local government leaders believe part of these budgets could be much more effectively spent on council services such as pre-hospital care for the elderly and infirm, or early intervention services for troubled children and their families. The LGA believes such a move would ultimately save money for other parts of the public sector by reducing demand for hospital and health services and improving educational outcomes and job prospects for young people.

Sir Merrick Cockell, Chairman of the LGA, said:

"Local government has so far borne the brunt of cuts to public spending. If the Government pursues the same policy again local services will suffer to the point where many councils start failing their communities.

"Anycouncil is an average upper-tier local authority and the measures it will have to consider if faced with a further 10 per cent cut in 2015/16 will have to be considered by many councils right across the country. If the residents of Anycouncil face the prospect of closures to children's centres and libraries, more potholes on local roads and lights out after midnight, then millions of residents are living in areas where their council will be forced to do the same.

"Councils were already the most efficient part of the public sector before the current spending round. Over the past three years they have worked tirelessly to deliver new efficiencies through measures such as sharing services, restructuring the workforce and reducing senior pay. This work can only go so far in reducing the impact of funding cuts on local services. In many council areas we have now reached a stage where noticeable cuts to local services are a mathematical certainty unless the next spending round places local government finance on a sustainable footing.

"The Government has to take steps which deliver long-term efficiency across the whole public sector and encourage government agencies in local areas to work together to find ways of improving services and making savings. In the short term this has to involve the removal, or at the very least adjustment, of ring-fencing from health and schools budgets to ensure services like social care and early intervention for troubled children are properly funded. This is the most effective way of reducing the demand for other, more costly public services elsewhere.

"Ultimately the only way of maintaining public services in the face of proposed long-term cuts is a radical redesign of the way public services are provided and paid for. This has to be based on the idea of allowing local areas to design services around the needs of people and communities. Our research shows that the Community Budgets approach would save billions of pounds a year while improving the quality of services, but this potential will only be met if the whole public sector embraces the idea."

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