LOCAL authorities face a budget cut of 1.7% per year in real terms over the next five years.

Chancellor George Osborne delivered his 2015 Spending Review covering the next five years on Wednesday (25 November).

For local government, there is a cash terms rise from £40.3bn in 2015-16 to £40.5bn in 2019-20.

Despite the 0.5% cash increase, this still represents a fall of 1.7% per year in real terms over the Spending Review period.

Alongside the settlement, the government said it was giving more powers and greater flexibility for councils to take control of their finances while protecting vital public services.

It said it would also boost adult social care through a £3.5bn investment.

This will come from a social care 2% council tax ‘precept’ which Mr Osborne said would enable councils that deliver adult social care to raise up to £2bn a year by 2019-20.

Mr Osborne said the government would also make £1.5bn available to local authorities for social care services.

In response, Local Government Association chairman Lord Porter said the government had listened to the concerns set out by local authorities.

“Today's announcement on council tax will go some way to allowing a number of councils to raise the money needed to offset some of the cost of social care,” he said.

Lord Porter said the £1.5bn increase in the Better Care Fund announced was “good news”, but it was vital that it was new money and must be spent on adult social care.

But the government had still handed down a difficult £4.1bn funding cut over the spending review period for residents on top of almost £10bn in further demand-led cost pressures.

“The consequences for our local communities who will suffer as a result should not be underestimated,” said Lord Porter.

"It is wrong that the services our local communities rely on will face deeper cuts than the rest of the public sector yet again.”

Local taxpayers were being left to pick up the bill for new government policies without any additional funding, said Lord Porter.

Even if councils stopped maintaining parks and closed all children's centres, libraries, museums and leisure centres they would still not have plugged the financial black hole they face by 2020.

"These local services which people cherish will have to be drastically scaled back or lost altogether as councils are increasingly forced to do more with less.”

Local government had led the way at finding innovative ways to save money, but after five years of doing so the majority of savings had already made,” said Lord Porter.

The government looked set to miss a once in a generation opportunity to transform public sector expenditure while protecting the services that bind communities together.