LOCAL government finances are at a “tipping point”, an external auditor has told St Helens Council.

Grant Thornton have been instructed by the council to carry out an external audit for 2017-18.

On Monday, Robin Baker, director of Grant Thornton, provided members of the audit and governance committee with an update on the review.

“Local government finances are at a tipping point,” the report said.

“Councils are tackling a continuing drive to achieve greater efficiency in the delivery of public services, whilst facing the challenges to address rising demand, ongoing budget pressures and social inequality.”

The report also highlighted the recent findings of the National Audit Office (NAO), an independent Parliamentary body responsible for auditing central government departments.

The NAO’s report, which was published in February, reviewed the financial sustainability across local government – the first time since  2014.

The review also examined whether the Ministry of Housing, Communities and Local Government, along with other departments with responsibility for local services, understand the impact of funding reductions on the financial and service sustainability of local authorities.

The report found that there has been a 49.1 per cent real-terms reduction in government funding for local authorities since 2010, and a 28.6 per cent real terms reduction in spending power (government funding plus council tax).

The NAO concluded that the current pattern of “growing overspends” on services and “dwindling reserves” exhibited by an increasing number of authorities is not sustainable over the medium term.

The Grant Thornton report said: “The NAO’s view is that the sector has done well to manage substantial funding reductions since 2010-11, but financial pressure has increased markedly since the 2014 review.

“Services other than adult social care are continuing to face reducing funding despite anticipated increases in council tax.

“Local authorities face a range of new demand and cost pressures while their statutory obligations have not been reduced.

“Non-social-care budgets have already been reduced substantially, so many authorities have less room for manoeuvre in finding further savings.

“The scope for local discretion in service provision is also eroding even as local authorities strive to generate alternative income streams.

Andy Bowden, deputy leader of St Helens Council, said it was “frightening” to see the funding cuts set out in the report.

He said: “We know the reality of those figures but seeing them starkly set out by the independent auditors  – it’s concerning.”