Local government is at risk of massive real-terms cash cuts of close to two-fifths by 2018 without changes to welfare budgets and tax levels,  leading financial experts have claimed.

Paul Johnson, director of the independent Institute for Fiscal Studies (IFS) think tank issued the stark warning today, following publication of the organisation's analysis into yesterday's  Autumn Statement.

Mr Johnson said the impact to public service expenditure would depend on decisions taken on the welfare and NHS budgets, which together account for nearly half of all Government spending.

‘Protect them completely, and protect schools, and every other area of spending will have to fall by 16% in the three years after the next election,' Mr Johnson said.

‘On top of what has happened in this Spending Review period that would take cuts in unprotected departments to an average of over 30%.  That looks inconceivable,' Mr Johnson added.

Unprotected parts of the public sector - excluding the NHS, schools and overseas aid budgets - face real terms cuts of close to one third - 31.5% by 2017/18, according to IFS calculations based on figures published yesterday by the Treasury and the Office for Budget Responsibility.