The Department for Communities and Local Government faces a two per cent cut in its budget, in line with other Whitehall departments, as the Treasury frees up cash for infrastructure projects.
The cut will inevitably be passed on to local councils, which have already seen budgets cut by more than a quarter since 2010.
John Weighell, the Conservative leader of North Yorkshire County Council – which has already found savings of nearly £100m – said: “We will continue to do everything within our power to implement these savings with the least adverse impact on the people of North Yorkshire, but it is inevitable that the quality of service we offer will suffer.”
But Treasury Minister David Gauke said the Government had no choice but to make “difficult decisions” on spending, adding that councils will be given a one-year grace period to allow for the fact council tax has been frozen for three years in a row.
“It is right that we try to focus public spending in such a way that will be as productive as possible,” he said. “It is right that we can switch some current spending onto capital spending such as road schemes and infrastructure investment.
“I think it’s reasonable to give notice to councils that they will be included once these exceptional circumstances don’t apply.”