The Communities Secretary, John Denham, has admitted that "things are going to be tighter" for councils in England and Wales. His comments follow a BBC survey which suggests that at least 25,000 council jobs will be under threat in the next three to five years.
Mr Denham told Today presenter Evan Davis that he was unable to give an overall figure for spending on local government services in three years' time.
He said that councils should not seek to cut back on frontline services and that "efficiencies are the way forward", suggesting that they could save money by sharing buildings and reorganising their "back office" services.
The BBC's forecast, based on answers from 49 councils with a combined workforce of 256,000, suggest that they will face cuts of 10%.