The cash councils receive from central government is being slashed by 28 per cent over the next four years.
Chancellor George Osborne also announced that the ringfencing of all local government revenue grants will end from April next year, with the exception of a simplified schools' grant and a public health grant.
This means individual councils will have to decide where the axe should fall, which has prompted concerns from charities including the Children's Society, who warn the move could lead to a "postcode lottery for the poor".
Cuts are expected across children's services, but youth services and Connexions are likely to suffer more than most.
Support services for schools will be significantly reduced. These include education welfare, school improvement, school transport, special educational needs provision and many more.
The estimated 490,000 reduction in public sector jobs will be felt keenly in local government, with many low-income workers expected to be made redundant and job vacancies not replaced.
Osborne claimed measures to reduce bureaucracy will make it easier for councils to deliver services more efficiently.
Overall, the number of core grants that go to local authorities will be reduced from 90 to fewer than 10 and local authorities will cease reporting on local area agreements.
EDUCATION
The government made much of the fact that the schools budget will be protected until 2015, but the comprehensive spending review does still signal tough times ahead for the education sector.
The total schools budget for fiveto 16-year-olds will rise from £35bn to £39bn over the next four years, including a £2.5bn pupil premium. Spending on 16 to 19 education and training is also set to increase. This equates to a real terms increase of just 0.1 per cent each year.
Overall, the Department for Education (DfE) faces budget cuts of three per cent by 2015. Crucially, for children's services, the department's non-schools budget will be hit particularly hard with a reduction of 12 per cent, and administration costs at the DfE will have to be reduced by 33 per cent.
About £500m will be saved by scrapping Education Maintenance Allowance payments for 16- to 19-year-olds and replacing them with more "targeted support".
Capital spending is also set to be reduced by 60 per cent in real terms by 2015, although £15.8bn will be spent on refurbishing or rebuilding 600 schools.
Cuts to local authority budgets will affect schools, since councils provide a wide range of support services, from special educational needs provision to school improvement and education welfare.
There is, however, a promise to give head teachers more flexible budgets, while parents, teachers and community groups will be supported to establish free schools outside of local authority control.
EARLY YEARS
The Sure Start budget is to be maintained in cash terms, which means funding for Sure Start has been frozen. While spending on the programme will reduce in real terms during the spending review period because of the effects of inflation, many in the sector are relieved Sure Start appears to have escaped bigger cuts. The Department for Education has made assurances that Sure Start will remain a universal service, but it will investigate ways of better targeting disadvantaged families.
More early years providers will be encouraged to enter the market through measures including payment-by-results schemes.
But with local authority budgets taking a big hit and the removal of ringfencing to council grants, the quality and sufficiency of childcare and children's centres will have to be monitored closely.
EARLY INTERVENTION
An early intervention grant "worth about £2bn by 2014/15" will be created for local authorities. This will be allocated to councils to spend as they see fit on a range of early intervention services.
It is not exactly clear how the sum total of the grant compares with the value of the individual funding streams it replaces.
The government will also look at setting proportions of appropriate services across the public sector that should be delivered by independent providers, such as the voluntary and community sectors and social and private enterprises.
This includes early interventions for the neediest families, early years, community health services and youth services.
BIG SOCIETY
The community and voluntary sector (CVS) will be backed by £470m of funding allocated to the Office of Civil Society over four years. This will include a one-year £100m transition fund for charities delivering frontline services, and a Community First Fund for small organisations in deprived areas. The government is also aiming to recruit 5,000 community organisers. Plans were confirmed to get 10,000 young people involved in the National Citizen Service, in the initial pilots for 16-year-olds in 2011/12 and 30,000 in 2012/13.
While the transition fund will be seen as a lifeline for many struggling charities, in reality these announcements could do little to offset the cuts. The Association of Chief Executives of Voluntary Organisations estimates that charities face up to £4.5bn in funding reductions over the next four years. Many CVS bodies receive statutory funding from local authorities, which face reductions amounting to 28 per cent over four years. And the Charity Commission's funding will fall by 27 per cent over the next four years.
Until exact figures are published, it looks like the middle ground will suffer, as organisations that do not cater for the most disadvantaged have been left without support.
WELFARE REFORM
Welfare payments for parents took another hit following proposals announced at the Tory conference to end child benefit for higher rate taxpayers.
The percentage of childcare costs that parents can claim through the childcare element of the Working Tax Credit will be reduced from 80 per cent to its previous level of 70 per cent, saving £385m by 2014/15.
Parents with one child will lose £17.50 in childcare support and those with two children will be £30 a week worse off as a result of the change, leaving low-income families paying more in childcare costs.
Couples with children will also have to work for at least 24 hours a week between them, rather than the current 16 hours, to be eligible for the Working Tax Credit.
However, Chancellor George Osborne did state that child benefit will not be scrapped for children aged 16 and above and the child element of the Child Tax Credit will increase over the next two years - by £30 in 2011 and by £50 in 2012 - to protect low-income families from the cuts in the welfare system. Meanwhile, he reiterated plans to create a universal benefit system that will be introduced over the next two parliaments with £2bn set aside to deliver it.
CHILD POVERTY
Children and families shoulder a sizable chunk of the £7bn cuts to welfare spending announced last week. The unpopular child benefit changes were confirmed, meaning families with a higher rate taxpayer would become ineligible from 2013.
Although the Chancellor said these changes would have no measurable impact on child poverty over the next two years, campaigners have warned that child poverty will increase. This is because of the cumulative impact of the household benefit cap, reductions in childcare tax credits, an increase in working hours for parents to be eligible for working tax credit and higher rents for social housing tenants.
The End Child Poverty campaign has calculated that the increases to the child element of the Working Tax Credit equates to just 8p and 14p per child per day.
CHILD PROTECTION
At a time when child protection and support for looked-after children is coming under increased pressure, the severe cuts to local authority budgets has the potential to amplify the problems facing children's social care services.
The British Association of Social Workers also fears that the level at which local authorities will be able to provide support to social workers is under threat. The Fostering Network is concerned about the support arrangements for foster carers, fearing that the shortage of carers could worsen alongside increased numbers of placements breaking down.
YOUTH JUSTICE
Immediate funding implications of the spending review for youth justice are unclear due to the complicated way in which youth offending teams are funded as well as the proposed abolition of the Youth Justice Board (YJB).
Youth offending team managers are desperate to learn the extent of cuts to the budgets of various funding partners including the police, probation, health, local authorities and the YJB.
George Osborne reiterated plans to save money across the entire criminal justice system by sending fewer offenders to custody. This will be achieved through "tough community penalties" instead of short prison sentences, the use of restorative justice and payment-by-results schemes with private and voluntary providers.
Proposals will be published in a justice green paper, expected by the end of the year. The government will also take forward plans to invest in mental health liaison services at police stations and courts.
HEALTH
The ringfencing and 0.4 per cent real terms increase of the NHS budget over the next four years is welcomed by the sector, but increasing demand from an expanding population will cancel out any perceived increase in resources.
The government has pledged to expand access to psychological therapies for the young and expand the use of personal budgets for children with disabilities and long-term health conditions.
But against a backdrop of 28 per cent cuts in central government funding to local authorities over the next four years, and of £20bn of efficiency savings in the NHS, the impact on children's health services is yet to be seen.
The future for voluntary organisations providing services including child and adolescent mental health services is also far from certain as many are funded through local authorities.
