Schools, housing, and rubbish collection face deep cuts as local authorities are hit by a "double whammy" in the recession of falling revenues and greater demands from the public.
The first nationwide survey of councillors, carried out by ComRes for The Independent, shows that town halls will be in the front line of the spending squeeze that both Labour and the Conservatives admit is needed to reduce the deficit in public finances.
With council tax bills held down by central government, the pressure is on to make savings. Council leaders say they will try to "do more for less" but that the quality of key services is bound to be reduced.
Three out of four councillors (76 per cent) say their authority does not have the financial resources it needs to deliver the services residents expect.
More than two in three (68 per cent) say their council's financial position has worsened in the past year, 67 per cent expect it to worsen in the next 12 months and 10 per cent expect an improvement.
A spokesman for the Local Government Association said: "Town halls are being hit by a perfect storm caused by the recession. Sources of income have dropped sharply at a time when more and more people are turning to councils to help them through tough times.
"The tough economic outlook is forcing councils to take a look at almost every aspect of their finances. Almost 7,000 jobs have gone in the last six months alone and as the effects of the recession continue to be felt, we fully expect councils to keep on cutting jobs over the course of the next 12 months. Despite this, local government has delivered the lowest council tax rise for over a decade and is continuing to make big efficiency savings." In its first annual "audit" of town halls, ComRes interviewed more than 500 councillors in England and Wales, who listed education, social housing and waste and recycling as their top priority for extra investment. Their lowest priorities were environmental health, consumer protection and cemeteries.
The recession has prompted a surge in demand for council-tax and housing benefit and social housing. Demand for planning services has fallen the most. More than seven in 10 councillors (71 per cent) claim that their authority does not have enough powers to provide the services for which residents ask and 96 per cent want central government to delegate more powers to town halls – a pledge repeatedly made by national politicians in opposition but rarely kept when they win power.
More councillors believe their authority will emerge stronger from the recession as a result of striving to make efficiency measures.
Andrew Hawkins, the chief executive of ComRes, said: "Local government is being squeezed by the unpleasant combination of worsening revenues and increased demand on council resources. The coming year will clearly be a very tough one for local government, hit by a double whammy of shrinking receipts and increased demands for services."
Yesterday, Gordon Brown admitted public spending would have to be squeezed and refused to rule out further tax rises: "Nobody wants to raise taxes but I think people want us to show... that we've got a sensible deficit reduction plan and one that is fair across the board to the population of the country."
The Prime Minister, who is focusing on the economy and job opportunities for young people this week, admitted it had been a "difficult decision" to introduce the new 50 per cent top rate of tax on earnings above £150,000 from next April. But he declined to say that it would be enough to close the deficit and admitted that some spending programmes would have to be cut.
An Ipsos MORI survey published yesterday showed people are more optimistic about the economy, but this is not translating into higher support for Labour or Mr Brown. Two in five (43 per cent) believe the economy will improve over the next year, up nine points on last month and the highest figure since the 1988 "Lawson boom".
But the Tories enjoy a commanding 17-point lead over Labour, with 43 per cent support (up three points on last month). Labour is on 26 per cent (up two) and the Liberal Democrats on 17 per cent (down one point).
Recession Britain: The impact on councils
* One in five councils report increased demand for school places, partly due to parents switching children from private schools; more than 15 per cent of authorities have seen rise in requests for free school meals.
* Almost 7,000 local authority jobs already lost; further cuts expected at same pace over the next year
* A £4bn loss of income over last two years, the equivalent of almost £11m every day, due partly to lower sales of land and buildings and low interest rates paid on their reserve funds
* 86 per cent of councils have seen an increase in the number of housing benefit applications; 90 per cent of authorities have seen more people seeking welfare or debt advice
Source: Local Government AssociationReuse content