Councils will face around £10bn of unfunded costs over the next five years, according to analysis by the Local Government Association (LGA).
The LGA said local authorities could not be expected to ‘pick up the bill for new national policies while being handed further spending reductions’.
It has urged chancellor George Osborne to take account of these added pressures ahead of November’s spending review.
Exempting house builders from Section 106 and Community Infrastructure Levy payments for 200,000 new starter homes will see councils lose £3bn during this parliament. Combined with cuts to social housing rents, rising business rates appeals from 2017, the National Living Wage and other changes it will cost councils £6.3bn by 2020.
That comes on top of £3.6bn of added costs due to inflation and rising demand.
LGA chairman Cllr Gary Porter said November's spending review would be ‘critical for the future of our public services’.
‘Leaving councils to pick up the bill for new national policies while being handed further spending reductions cannot be an option,’ he said.
‘Enormous pressure will be heaped on already stretched local services if the Government fails to fully assess the impact of these unfunded cost burdens when making its spending decisions for the next five years. Vital services, such as caring for the elderly, protecting children, collecting bins, filling potholes and maintaining our parks and green spaces, will simply struggle to continue at current levels.
‘We need the decisions in the spending review to be guided by the fundamental principle that local people will know best how to spend money on services in their area.
‘If our public services are to survive the next five years, councils need fairer funding and the freedom to pay for them. Only radical reform of the way public money is spent and widespread devolution of transport, housing, skills and health and social care across England in the spending review can protect the services which bind our communities together and protect our most vulnerable.’