COUNCILS serving England’s poorest communities fear their already overstretched budgets will not keep up with 40-year-high inflation this year, a new survey has revealed.

In a dire warning of the perilous state of local government finances, 47 authorities in the north, the Midlands and on the south coast warned they will have to make savings totalling £700 million due to stubbornly high prices. 

The research, conducted by the Special Interest Group of Municipal Authorities, also showed that six in 10 councils think cost-cutting measures to reduce capital budgets set aside for key regeneration and infrastructure projects are inevitable. 

Tory austerity has seen average real-terms government funding for all types of local authorities fall since 2015-16. 

Reductions have slowed since ministers committed to a “levelling up” agenda in 2019, but growing reliance on council tax and other revenue sources means poorer areas are being hit harder. 

Labour’s Barnsley Central MP Dan Jarvis said: “After 13 long years of cuts, council finances are in a perilous position.

“Cuts are the opposite of levelling up and will only exacerbate the cost-of-living crisis for millions.”