Government reveals council cuts of up to 8.9 per cent

The settlement distributes the £29 billion in 2011/12 and the £27 billion in 2012/13 that the October Spending Review allocated to local authorities through the formula grant.

Pickles said the settlement ensures that no council faces a reduction of more than 8.9 per cent in spending power in either financial year.

"There has been a great deal of speculation and scaremongering about what the implications of the local government settlement might be," he explained.

"The reality is that despite the toughest economic circumstances in recent memory, the coalition government will ensure that next year the average reduction in councils' spending power will be 4.4 per cent.

"By adopting an intelligent and fair approach to the way funding is allocated we have been able to ensure those parts of the country that are most reliant on central funding continue to get the lion's share of the taxpayers' money that is available. Funding fairness underpins this settlement."

Pickles added that special consideration has been given to parts of the country with the highest levels of need - with funding per head for residents in Hackney in 2011/12 coming to £1,043 compared to £125 per head in Wokingham.

Meanwhile the government has admitted that schools funding will not rise by 0.1 per cent in real terms as had been promised in the comprehensive spending review.

Christine Blower, general secretary of the National Union of Teachers, said: "This is not good news for schools, particularly as it comes on top of the cuts already being made by local authorities to the central services provided to schools.

"These services by and large offer support for pupils with the most difficulties and those from the most disadvantaged backgrounds."