Councils must find 12.5% of savings by next year to fill a £5.8bn ‘black hole’ in funding, the Local Government Association (LGA) has warned.

Analysis by the LGA shows the funding gap across local government is predicted to grow by £2.1bn a year, reaching £12.4bn by 2019.

Adult social care alone is expected to see a £1.9bn shortfall by 2015-16. Successful integration of health and social care – with the new Better Care Fund (BCF) at its heart – ‘is vital to save the care system from collapsing’, it said.

LGA chair 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 anymore.?

‘Next year will be a make or break moment for adult social care, for local services provided by councils and for the NHS.’

He said the introduction of BCF in 2015 was ‘a once-in-a-generation opportunity to both improve the quality of life for people in their older years and steer England’s social care system away from the road to financial ruin’.

He added: ‘It will only be through a determined effort from councils, the health service and government working together that we can end the vicious cycle of over-spending on a broken system. Failure to get this right would be catastrophic for an entire generation who rely upon care and the NHS. It will also deprive millions of the popular local services like buses, parks, libraries and leisure centres that help improve quality of life and bind communities together.’

But local government minister Brandon Lewis accused the LGA of being ‘doom laden and alarmist’ and said its claims ‘lack credibility’.

‘Councils are balancing their books each year and, as the LGA’s own research shows, the public now thinks they are delivering better services than before,’ said Mr Lewis.

‘There is significant scope for councils to make sensible savings and cut waste by tackling the £2bn a year 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.’