Local authorities face at least five more years of dramatic cuts in spending, the Chancellor’s Autumn Statement has confirmed.
Funding from the Treasury for local services is to be cut by more than a fifth by 2019-20.
The figures are included in forecasts published by the Office for Budget Responsibility, the official Treasury watchdog, as part of the statement.
It predicted that the main grant provided to local councils would fall from £60.3 billion in 2014-15 to £50.5 billion in 2019-20 (the figures do not include a separate grant provided specifically to pay for housing benefit).
The figures don’t include the impact of inflation, which means the cuts will be even higher in real terms.
Treasury documents also show that the Chancellor is to continue tough controls on public spending for a year longer than previously announced.
Spending is to fall in 2016-7 and 2017-18 at the same rate as it did between 2010 and 2015 – which means more dramatic cuts in departmental budgets will be required.
But the original plan was to hold spending level in 2018-19 and allow it to start increasing after that.
The Chancellor has now extended austerity for a further year, with spending held flat for 2019-20 as well.
In his statement to the House of Commons, Mr Osborne insisted: “I do not hide from the House that in the coming years there are going to have to be very substantial savings in public spending.”
This would mean cuts of £13.6 billion in 2015-16, as previously announced, and “two further years where decisions on this scale will be required”. He added: “We’re going to have to go on controlling spending after those years if we want to have a surplus and keep it.”
But he insisted he was succeeding in cutting spending even faster than expected, allowing him to find money to pump into the NHS.
“Because of careful management, we can afford to put part of that underspend money into our National Health Service to cope with the pressures it faces – £2 billion every year to the frontline of the NHS. Not money that busts our plans, but extra money available because we have a plan.”
The forecasts will confirm what local councils are already expecting - that they are set for more huge cuts in spending which will inevitably have an impact on local services.
Birmingham council leader Sir Albert Bore warned earlier this year that the authority was sitting on “a ticking time bomb” and could have to lose 6,000 staff by 2018, on top 7,000 jobs already lost since 2010.
Speaking in September, he warned: “The cuts in funding combined with increased spending pressures mean we will have made cuts of over £800 million by 2018 – equivalent to over 60 per cent of the controllable budget. In the next year alone we must find around £200 million, on top of the £460 million already cut from our services. Far from austerity being over, as some seem to believe, this is the biggest cut in mainstream funding we have seen so far. And the cuts are planned to continue for at least three more years.”