Councils braced for harsh cuts in spending: Schools and social services face job losses and libraries may be closed. Ngaio Crequer reports

COUNCILS are bracing themselves for the worst cuts in recent years. Jobs in teaching and social services - the high spending departments - will be worst hit, but libraries may be closed, old age provision cut, advisory and welfare services abolished.

Many authorities are concerned that they will not be able to fund existing services. Others complain about the Area Cost Adjustment - which weights the amounts authorities in different parts of the country receive for employing staff such as teachers, police officers and firefighters.

Cleveland, for example, says that because of this it loses money which goes instead to the South-east. It estimates the loss at about pounds 5m and faces an overall budget loss of pounds 15m.

Many councils say that the removal of further education from their remit has meant a loss of money. They spent less than the notional amount being taken away. Essex, the Isle of Wight, Norfolk, and Nottinghamshire county councils are among many which say that the Government has got its figures wrong.

Many councils face a standstill budget. This means they have to make 'efficiency savings' yet to be spelt out. 'It is easier to hide services no longer carried out than to announce lots of job cuts,' one senior council official said. There are also new statutory responsibilities such as Care in the Community, and the Children Act.

In Somerset, Tories are hoping not to reduce services, but their scheme relies on a pay freeze for workers and a low estimate for inflation.

However, according to the Liberal Democrat opposition: 'It is a cut-and- run budget. An iceberg budget, when most of the damage is under the waterline. It is totally cynical.'

This month and next councils will set their budgets and in April the Government will announce the capping criteria. The capping of local authority budgets is the means by which central government keeps a tight hold of the purse strings.

The capping criteria means that central government effectively decides how much each local authority can spend. Because the Government lays down what its capping criteria will be, many councils are forced to cap themselves, or produce a budget which will not exceed the limits.

In the autumn, the Government announces the Standard Spending Assessment (SSA) of each local council. This is what it thinks a council ought to spend to provide a standard level service. It also announces its provisional capping criteria. Councils that spend above the Government's assessment of their needs will be allowed a maximum spending increase of 2.5 per cent and of only 0.5 per cent if they are more than 10 per cent above their standard assessment.

The SSA is a way of distributing grant to councils, not of working out how much money councils actually need. It is based on data such as the number of people who live in an area, the number who come into the area to work and the number of schoolchildren aged five to ten. Councils say the formula does not sufficiently take account of actual local needs. This year, the SSAs will be reduced because further education has been taken out of local authority control. A number of councils say that more has been taken out than used to be spent on running the colleges.

The provisional capping criteria acts as a warning to councils that they may be designated for capping if they breach the limits. If a council is designated, the Government will decide its maximum budget.

Letters, page 18