COUNCILS face a “worst case scenario” with cuts of up to 40 per cent over four years, it was said last night.

Durham County Council leader Simon Henig said councils had taken a disproportionate hit, meaning local people using local services would be asked to pay for bailing out the banks.

Councillor Henig said councils faced appallingly difficult decisions and that they would not look the same in four years’ time.

He said services people have relied on for a long time would have to go.

The Chancellor said council funding would be cut by 7.1 per cent a year for the next four years and that protection for council grants would end.

Coun Henig said that when interest and cuts to other departments were taken into account, council budgets could be cut by 40 per cent.

Durham County Council is expecting to have to find savings of more than £90m over the next four years and will consult residents this autumn about what services to cut.

North Yorkshire County Council faces making savings of £69m by 2014.

Chief executive Richard Flinton said that could only be achieved by fundamentally reviewing everything the council does, and said there would inevitably be job cuts.

He added: “We originally estimated that some 500 jobs would go, but we will now need to make a further assessment when we know in December the precise details of the local government funding settlement.”

Darlington Borough Council faces a £22m budget cut over four years, with bus routes, after-school clubs, travel concessions for elderly and disabled people and CCTV management at risk.

A spokeswoman said: “On the first viewing, the announcements do not appear to fundamentally change the financial challenge that the council faces. However, they are at a national level and we will not know the detailed implications for Darlington until December.”

Hambleton District Council leader Neville Huxtable said the authority would have to go over all its services to identify savings and consider whether they should be delivered at all.

He said: “Although all cuts are hard to make, those we have made so far have been easy compared to what we now have to achieve.”

Baroness Margaret Eaton, the chairwoman of the Local Government Association, said the cuts would hit councils and residents extremely hard and would inevitably affect the front line.

She said: “Town halls will now face extremely tough choices about which services they can keep running.”