This figure could translate into cuts of 10-20% over five years for councils, according to Tony Travers, director of research at the Greater London Group at LSE, at the Chartered Institute of Public Finance and Accountancy conference yesterday.
Travers said local government’s capacity to decrease spending could work against authorities, however, as it could encourage the Treasury to demand even larger decreases.
“Councils have very cautious finance advisors who tend to get ahead of the game because local authorities have to have budgets that balance,” he said.
“If a local authority looks like it knows how to handle this, the government will squeeze even more. It’s an unavoidable problem for local authorities have to face.”