COUNCILS need to make huge savings before next April, equivalent to an eighth of their total budgets, a new report warns.

Analysis from the Local Government Association, which represents almost all English councils, says local authorities face a £5.8bn funding ‘black hole’ between March and 2016, caused by government cutbacks and rising demand for services such as adult social care.

The funding gap in adult social care alone amounts to £1.9bn in 2015-16, the LGA said.

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April marks a critical point for the under-pressure service, with the pooling of £5.4bn from councils and the health service, and is already being described as a “make or break” moment.

But despite the cuts, the LGA said, councils will try to protect spending on social care next year as much as possible, potentially meaning cuts will have to go further and deeper in other areas such as bus services, libraries or leisure centres.

The North-East and Yorkshire and Humberside are among the regions with the most severe long-term problems. North-East councils’ forecast funding for 2019-20 is, on average, just 74 per cent of expected demand; while Yorkshire and Humberside is the lowest in England, at 73 per cent. The South East stands at 83 per cent.

Conservative LGA chairman Sir Merrick Cockell said: “In recent years, local government has worked tirelessly to save billions while protecting services for those who need them most.

“But the scale of the challenge facing local authorities next year is stark. Council finances are on a knife-edge and the old way of doing things – including the way we care for our elderly population – just won’t work any more.

“Next year will be a make or break moment for adult social care.”

A major report into the future of adult social care funding to be released later this week is expected to warn the service could become unsustainable if current cuts continue.

However, local government minister Brandon Lewis said the LGA’s “doom-laden and alarmist claims lack credibility”.

Councils account for a quarter of all public spending and must play their part in reducing the deficit, he said, adding that councils were balancing their books and the public thinks they are delivering services better than before.

“There is significant scope for councils to make sensible savings and cut waste by tackling the £2bn of council tax left uncollected, the £2bn ignored or lost from fraud, the £2.4bn of surplus properties left dormant and the £19bn piled up in reserves,” Mr Lewis said.