Last month's  Spending Round announcement by the Chancellor, George Osborne, confirmed further funding reductions for local government in 2015-16, following the 28% real terms funding reduction over the four year period to 2014-15.

In his speech, the Chancellor announced a number of initiatives aiming to better utilise existing resources and generate efficiencies between departments. For instance, he called for more joined up working between police forces, and between police forces and local authorities - with a £50m innovation fund to be established to support this work. He also called for greater collaboration between health and social care services, with £200m to be transferred to local authorities from the NHS in 2014-15, and a £3.8bn pooled budget in 2015-16. In addition, £35m is to be made available to local authorities in 2015-16 to help prepare for reforms to the system of social care funding, including the cap on care costs from April 2016. There is also the £200m additional funding to the Troubled Families programme being managed by DCLG.

Many in the sector will support these specific funding changes and some of the joined up thinking behind them, but do they compensate for the overall funding reduction?

The 2013 Spending Round reportconfirms that the DCLG Local Government resource limit will reduce by 10% in 2015/16. This includes the Office of Budget Responsibility (OBR) forecast for localised business rate retention, but excludes council tax freeze grants announced as part of the Spending Round. The report further notes that local government specific funding will reduce by only 2.3% in 2015-16, based on indicative funding allocations from across various government departments. Trying to establish the basis for this much more limited reduction to 2015-16 funding is - as the Institute for Fiscal Studies more general comments around interpreting where the cuts are being made last week - "next to impossible".

Whilst individual local authorities will not be able to confirm their exact position until the 2015-16 finance settlement is published, they must review their medium term financial plans, and the scenarios that underpin them, in light of the latest Spending Round.  So, rather than trying to better understand the OBR's calculations on business rate retention at a macro level, what are local assumptions on this income stream, which will clearly vary by authority?

Will those authorities who have frozen their council tax since 2011/12 (and received additional grants for doing so) continue to freeze the tax for 2014-15 and 2015-16? Will others who have declined the council tax freeze grant decide to change their approach for next year? The erosion of the council tax base is a growing and significant issue for those authorities who have relatively low levels of government grant.

Revisions to medium term financial plans will need to reflect the likely position for each authority. With both the Government and opposition effectively signing up to the 10% reduction in 2015/16, many authorities are already thinking about the fundamental changes needed in 2017/18 and beyond.

There was some positive news in terms of capital spend, such as the £21bn planned investment in schools over the next parliament, and the £4.7bn investment into health and social care in 2015-16. Many councils will also welcome the planned consultation on giving them greater flexibility on the use of capital receipts to pay for the one-off costs of service reform.However, these remain medium-to-long-term benefits. The Spending Round proved disappointing from a local authority perspective in terms of the broader growth agenda, with  the £2bn per annum Single Local Growth Fund from 2015-16being significantly less that the £70bn recommended by Lord Heseltine, and which includes a significant reallocation of existing council funding.

Whilst the outlook remains very challenging for the sector, over the past three years, local government members and senior officers have tightened their belts and taken a far more innovative and dynamic approach to managing their services and delivering their budgets. The government is clearly relying on their continued resourcefulness to help meet the fiscal shortfalls facing the wider public finances.

In academia, you only get your best students sitting the hardest exams, and the same holds true for public sector budgeting. By tasking local government with finding additional efficiencies and savings, the Chancellor is asking the public sector's star pupil to rise to the challenge in the knowledge that it alone among the public services has the focus, innovation and the wherewithal to succeed.

While councils will undoubtedly feel the pressure of the announced cuts, many will be capable of avoiding a tipping point based on prudent survival techniques, and indeed,growth opportunities realised over the past few years.

However, for some councils the jury is still out on whether they'll be able to keep their heads above water for much longer. For them, the proverbial wolf is not still just heading inexorably up the garden path, he is starting to blow the house down.