According to the London School of Economics, local councils can expect a reduction in their funding of as much as 15% in real terms and this could mean 140,000 job losses in the sector over the next two years.
The Times reports this morning 30% of these losses will be frontline services with the remaining 70% affecting back office staff.
Carole Scott, director at Bottle PR, told PRWeek: ‘It seems likely that in-house communications departments will be cut. Trimming fat is one thing but if 'The Big Society' is to take shape, then local authorities will need to develop effective communications; how can charities and community groups do more if local government isn’t able to talk to and with them?’
She added: ‘The cuts are likely to affect PR agencies in two ways. Money for projects and campaigns run by agencies will probably disappear quickly. But in the medium term we could see reduced in-house teams turning to agencies to deliver core programmes that in the past would have been handled by their own staff.’
Communities Secretary Eric Pickles is pushing for power to be taken from Whitehall and given to local community associations, so they can shape their communities by taking control of redundant bars, schools and post offices, in a similar neighbourhood planning model to that of Germany.
The news comes only weeks after PRWeek revealed the coalition Government spent £1.98m on PR consultancies since it came to power in May.
It is understood that a number of councils have already moved their comms departments into shared services functions, but the Local Government Association declined to comment until the individual budget settlements have been assigned to councils later today.
An LGA spokeswoman said: 'We are in the same position we were at after the comprehensive spending review, but we know this will be a tough financial settlement for local Government.'