Councils face 'worst case' cuts of 30pc in one year

Analysis of cuts in Government funding agreed in last month's Spending Review reveals some bigger councils will have to cope with their "worst case scenario" of cutting revenue budgets by a third in a single year.

Local authority bosses will have to be "ruthless" to reduce spending and "dramatically" cut back offices but have a real opportunity to improve services, according to local government expert Iain Hasdell from accountants KPMG.

Mr Hasdell said: "Most large councils will need to make cost reductions of at least 20 to 30 per cent in relation to their revenue budgets in 2011/12 in order to optimise their chances of remaining financially viable as organisations in the medium term."

The impact on next year's finances is particularly severe because the four-year Spending Review decided the biggest cuts to the main Government funding stream should come next year while extra grants - which mainly go to bigger authorities and deprived areas - are being scrapped altogether.

Many councils will have drawn up plans for a 30 per cent cut as a "worst case scenario" hoping it would never need to be enacted.

The warning comes as more than a third of Selby District Council's workforce is set to be axed in the biggest shake-up in the 36-year history of the authority.

Eighty posts out of the 222 full-time positions are expected to go as the council battles to cut 3m during the next four years from its annual 11m revenue budget, with more services likely to be contracted out.