COUNCILS warned today that key services will be devastated without adequate funding in the upcoming spending review. 

The review, which sets out day-to-day departmental budgets for the next three years and investment budgets for the next four, will be presented to Parliament by Chancellor Rachel Reeves on June 11.

The Institute for Fiscal Studies (IFS) has said the government faces choices which will be “unavoidably tough.”

The think tank said that given the government has committed to increasing defence spending, boosting capital funding for one department will require cuts elsewhere.

Increasing NHS funding anything like the historical average rate, would mean imposing real-terms cuts for “unprotected” departments, the IFS added.

Protected departments include schools, health and defence, but not areas such as local government. 

Cllr Pete Marland, the Local Government Association’s economy and resources board chairman, warned: “Councils in England face a funding gap of up to £8 billion by 2028/29 and have already had to make huge savings and efficiencies over the past decade.

“They desperately need a significant and sustained increase in overall funding in the spending review to meet the requirements being placed on them.

“Without adequate funding, councils will continue to struggle to provide crucial services — with devastating consequences for those who rely on them — and it will be impossible for them to help the government achieve its reform and growth agenda.”

Bee Boileau, a research economist at IFS, said: “At the spending review, the government faces some unavoidably tough choices, particularly as after turning on the spending taps last autumn, the flow of additional funding is now set to slow to more of a trickle. 

“Take capital spending: government investment is set to be sustained at historically high levels in the coming years, but most of the increase happened last year and this year, and it looks as if all of the remaining increase in funding over this parliament has already been allocated to defence.”

Britain currently spends 2.3 per cent of its GDP on defence.

In February, Prime Minister Sir Keir Starmer announced plans to increase it to 2.5 per cent by 2027, and 3 per cent during next parliament.

A government spokesperson said: “This spending review will scrutinise every single pound the government spends to ensure it’s delivering on our plan for change.”