The think-tank’s research also revealed that two-thirds of councils will be forced to dip into reserves in order to balance their budgets.
A large majority (eight out of ten) of authorities lack confidence in the financial sustainability of local government finance – the same proportion as in last year’s survey.
For the first time in almost three years, children’s services have overtaken adult social care as the top pressure for councils, although adult social care remains the top long-term pressure for councils.
Just over half (53%) of councils are planning to scale back parks and leisure services, 40% plan to cut adult social care and 34% youth services.
LGIU chief executive Jonathan Carr-West said: “Councils are on the edge. They are for the most part holding services together (though a significant minority are not). But they can only do this by raising council tax, increasing charging and draining their reserves.
“The system is unsustainable and needs far more fundamental reform than is presently on offer.”
Carr-West added that it was “simply not acceptable” that no-one knows how local government finance will work after 2020.
“Councils are calling for assurances around funding for the next three years and for a fundamental redesign of the finance system. At present government is offering neither. That has to change.”
The survey revealed widespread consensus among councils about what needs to be done.
More than two thirds would like to see 2017 funding level remain for three years, which would help medium-term financial planning and for assurance from government that costs associated with charges to centrally set business rate policy.
Councils feel that the Fair Funding Review, which will recalibrate each council’s level of relative need, will not address the fundamental and structural pressures, the survey found.
Lord Porter, chair of the Local Government Association, said the LGIU survey highlighted the pressures councils had been under and the funding “cliff-edge” they were facing.
“Many will have to make tough decisions about which services have to be scaled back or stopped altogether to plug funding gaps.
“Extra council tax raising powers will helpfully give some councils the option to raise some extra income but will not bring in enough to completely ease the financial pressure they face.
This means many councils face having to ask residents to pay more council tax while offering fewer services as a result.”
The LGIU’s findings emerge in what has been a fraught week for local government finance.
On 2 February, Northamptonshire County Council issued a rarely used section 114 notice, imposing emergency spending controls, sparking wider concerns about councils’ financial sustainability.
Last night, MPs approved the 2018-19 local government finance settlement, but only after communities secretary Sajid Javid came under pressure to find additional funds for adult social care.
The LGIU survey was carried out in association with the Municipal Journal.
