Around one in five single tier authorities, and 10% of district councils, are at risk of facing a financially tipping point by 2016, according to new analysis.

A new report from Grant Thornton shows that 79% of single tier authorities and 88% of district councils have adequate medium term financial planning arrangements in place. For those unable to forecast their financial resilience - the report says the transformation of service delivery - which will require ‘significant’ compromises’, will be key.

The report does reveal an ‘evolution’ in financial management throughout local authorities, with a strong culture of efficiency and financial control.

Paul Dossett, head of local government at Grant Thornton UK LLP, said: ‘It is encouraging to see so many local government authorities have risen to the challenges they have faced over the past four years. This is a major achievement and reflects an evolution in financial management that would have been difficult to envisage given the original reaction of the sector to the spending review in 2010.’

The analysis shows that county and single tier councils are facing a proportionally greater challenge than districts due to their responsibility for demand led services such as social care. District councils are also leading the way in developing new models of delivery such as shared services and joint management, according to the report.

‘While their evolution should be celebrated, local government authorities will need to continue to adapt to further pressures in the coming years,’ added Guy Clifton, Grant Thornton's head of local government advisory. ‘Based on their track record over the past four years, we are confident that they will evolve to meet these challenges head on.’