Councils facing 'gravest crisis for 20 years'

As many as 150,000 jobs are expected to go over the next four years as hundreds of millions of pounds is slashed from budgets.

Support for affordable housing has already been hit, the multi-billion pound Building Schools for the Future (BSF) programme has been shelved and savings of at least 25 per cent are to be enforced on local authorities.

Even more stringent measures could be brought in after the Government's comprehensive spending review in the autumn, which council chiefs say would have a devastating impact across the region.

However financial experts believe the results could be positive for taxpayers, predicting a "golden age" of public-sector modernisation with the interests of citizens who use services having to be elevated above the interests of the workforce.

North Yorkshire County Council chief executive Richard Flinton warned front-line services will be hit and compulsory redundancies necessary.

Mr Flinton declared the financial crisis was "the gravest" he has faced in a career spanning more than two decades.

Barnsley boss Phil Coppard issued an equally stark prognosis, announcing he would need to save 40m and there will be "substantial" redundancies at the council – the town's largest employer.

Regional development agency Yorkshire Forward has announced it is inviting voluntary redundancies after the Government cut its budget by 40m.

Iain Hasdell, UK head of local and regional government at professional services KPMG, admitted that the cuts would be painful – predicting as many as 50,000 jobs would go in the region in the next 12 months – but believed the long-term result for taxpayers could be positive.

He said: "The necessary short term cuts in public sector spending, while undoubtedly painful, also present the opportunity for councils and the wider public sector to up their game for the long term, to increase productivity, to cut waste, to become more efficient and effective in ensuring better outcomes for local residents."

Mr Hasdell said non essential council services would probably be outsourced and common services – particularly back office – would be shared between public sector bodies.

He said there had been an unsustainable gap between productivity in the public sector – which has fallen by just over three per cent in the past decade – and spending, which has risen 37 per cent for local government in the region in five years.

Mr Hasdell said: "If productivity does not radically improve many public sector organisations will become financially unviable.

"It is true that the only logical outcome of this austerity drive across the sector is that there will be major reductions in the region's public sector workforce.

"However the context demands that the interests of citizens who use public services are elevated above the interests of the public sector workforce that commissions or provides them.

"Austerity should be seen as a creative platform for increased efficiency, productivity and financial self-sufficiency. Austerity could be the start of a golden age of modernisation in local government and beyond."

There are some glimmers of hope in the region – Wakefield Council has suggested that private sector growth in the city could go some way to balancing the losses in the public sector.

In Sheffield, chief executive John Mothersole warned that "what is about to happen out there is not good" but added he was confident the books will be balanced.

CORRECTION: The original version of this story contained a reference to North Yorkshire County Council making 100m of cuts over four years. The council will, in fact, have made 60m in savings during the last six year at the end of this financial year, and is faced with making 43m in cuts over the next four years - making a total of more than 100m of cuts over a period of 10 years.