Councils 'expecting bankruptcies'
Nine out of 10 council leaders expect some local authorities to face bankruptcy or fail to deliver essential services over the next three years, a survey showed.
The study found "cracks are appearing" as councils adjust to reduced levels of funding as a result of the Government's austerity measures and the fear of further cuts in this month's review of public spending.
Just 58% of council chief executives said they were confident that the savings they needed to make could be achieved without hitting the quality of services, down from 98% last year.
The report by PwC said councils had demonstrated an ability to "deliver significant financial savings and balanced budgets" by focusing on making the way they work more efficient.
But the report continued: "Below the surface, there are signs that cracks are appearing as councils adjust to the reality of continued and significant financial pressures, and anxiety that these will become even more pronounced after the June 2013 spending review.
"Those cracks are apparent through a growing concern that the savings secured to date, and to be secured in the near future, are beginning to impact upon the quality of services and outcomes."
The report added: "Nine out of 10 chief executives and leaders now believe that, within the next three years, some local authorities will get into serious financial crisis or fail to deliver the essential services that residents require."
The views of the town hall chiefs reflect a warning on council finances from the Commons Public Accounts Committee last week. The cross-party committee said the Government should draw up contingency plans to intervene in the event of "multiple financial failures of local authorities".
A spokesman for the Department for Communities and Local Government said: "Every bit of the public sector needs to do its bit to tackle the deficit left by the last administration, including local government which accounts for a quarter of all public spending.
"This Government's carefully considered reforms are helping councils achieve greater financial independence and deliver sensible savings while protecting frontline services, as demonstrated by local government's own figures which show residents' satisfaction has gone up since 2010."