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Councils in warning over job cuts

Local authorities in England face cuts in jobs and services after "the toughest local government finance settlement in living memory", councils have warned.

Councils will lose up to 17% of their funding from central government grants for 2011/12 and face a total funding shortfall of £6.5 billion over the next year, the Local Government Association said.

But Communities Secretary Eric Pickles said no council would suffer a reduction in its total spending power of more than 8.9% next year or 2012/13, once receipts from council tax and NHS support for social care is taken into account. The average reduction in spending power will be 4.4%, he told the House of Commons.

Mr Pickles said the local government settlement was "progressive and fair" because steps had been taken to protect the poorest areas which rely most heavily on public sector services.

He announced an £85 million transitional grant to help councils deal with changes to their funding, as well as a £650 million fund to reward authorities which freeze their council tax bills. And he said that measures had been taken to ease the "front-loading" of cuts into the first two years of Chancellor George Osborne's four-year spending review period.

Mr Pickles said: "By adopting an intelligent and fair approach to the way funding is allocated, we have been able to ensure those parts of the country that are most reliant on central funding continue to get the lion's share of the taxpayers' money that is available. Funding fairness underpins this settlement."

But his claim was challenged by Labour's Caroline Flint, who told the Commons that the coalition Government was imposing "unprecedented cuts on town halls the length and breadth of the country".

The Conservative chair of the Local Government Association Baroness Eaton said: "Councils now face incredibly tough choices about the services they continue to provide and those they will have to cut."

Lady Eaton added: "This is the toughest local government finance settlement in living memory.

"A few councils have seen a reduction in the money they receive from the Government of up to 17% in the first year. As a result councils face a total funding shortfall of £6.5 billion over the next year."

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