COUNCILS were last night bracing themselves for service cuts and the potential loss of thousands of jobs after the Government published details of £1.166bn local authority savings.

In making the announcement for 2010-11, Communities Secretary Eric Pickles confirmed no authority would face reductions in their revenue grants of more than two per cent.

But one community leader, Hartlepool Mayor Stuart Drummond, last night warned that the cuts were only the tip of the iceberg and said he feared the savings could jeopardise one in four jobs over the next three years.

Mr Pickles’ figures outlined how each council would contribute to £6.2bn worth of cross-Government savings.

He said it was the first step towards tackling an “unprecedented”

£156bn deficit the coalition Government had inherited. He added that unless borrowing was reduced, interest on Government debt would reach £70bn a year by 2014-15.

Mr Pickles said: “The detailed spending decisions outlined today show a clear determination to make the necessary savings while minimising the impact on essential frontline services like rubbish collections and protecting spending on schools and Sure Start.

“We have focused attention on reducing the centre and it is here that the reductions are the hardest.

“Steps have been taken to limit the impact on local authorities and make savings proportionally.”

In the North-East and North Yorkshire, the amount specified by the Communities and Local Government department (CLG) totalled £39.907m – but the final total is likely to be higher.

They include funds in education, housing and children’s budgets.

Yesterday’s announcement applies to area-based grants – money councils are free to use as they see fit in different priority areas – and a Department for Transport Kickstart fund.

The cuts come on top of a Government order to halt work on every transport scheme in the region where a contract has not been signed.

The decision has thrown those projects – including the long-awaited Tees Valley Metro system – into doubt.

The Association of the North-East Councils said the cuts would hit the region more than other parts of the country.

Association chairman Councillor Paul Watson said: “Such reductions and disparities in funding appear to run counter to the Coalition Government’s commitment to fairness, the need to address and eradicate child poverty across the country and measures aimed at reducing regional disparities.

“We are, therefore, concerned that the level of inyear reductions being proposed will place an even greater burden on children in an area facing higher levels of deprivation.”

Mr Drummond held an emergency meeting with Hartlepool cabinet members and senior managers yesterday.

He said the cuts would result in the loss of 60 jobs but speculated that it could affect a quarter of the council’s 4,500 workforce within three years.

He said: “Like a lot of announcements it is very fluffy on a lot of detail. They are passing the buck and saying ‘It is your problem’.”

In Darlington, funding for education services will be reduced by £750,000 and improvements for roads and the transport network will be reduced by £400,000. The revenue grant reduction totals £929,000, but the council said total savings would reach £2.5m.

Council leader John Williams said: “These latest knee-jerk cuts to public spending will have a real and damaging impact to services in the Darlington area. We will do our best to limit the impact on residents. But, as we have sought to provide value for money consistently over the years, each pound removed now impacts on our ability to deliver services, particularly to the young and vulnerable.”

Durham County Council faces a £3.2m reduction in its education budget and a total of more than £6.3m. The council warned the figure would be nearer £16.5m in grants.

Council leader Simon Henig said: “Local government appears to have borne by far the largest share of the first set of government cuts.

“It is also noticeable that of the councils with the largest level of cuts the vast majority are in the North of England, where some of these grants are so important in growing our economies.”

John Moore, North Yorkshire County Council’s director of finance and central services, said: “These announcements represent significant reductions in both capital and revenue grants from the Government to the county council.”

He said as well as a headline figure of £3.66m in revenue cuts, there was an additional £7.14m of capital grant reductions.

He added it was unclear what effect it would have on the Bedale and Leeming Bar bypass project.

Catherine McKinnell, MP for Newcastle North, where the cuts will also impact on the Tyne and Wear Metro, said: “These cuts will affect the provision of services to the most vulnerable people in our community and I am deeply concerned about the impact on my constituents.

“We warned during the election campaign about the threat posed by the Conservatives to vital public services and, sadly, our worst fears are being fulfilled.”