Councils face £10bn of cost pressures over the next five years, according to the latest analysis by the Local Government Association (LGA).

In addition to the £3.6bn of added costs due to inflation and rising demand, Councils also have to factor in the costs of exempting house builders from Section 106 and Community Infrastructure Levy payments for 200,000 new starter homes, cuts to social housing rents, rising business rates appeals from 2017, the National Living Wage and other obligations.

The LGA, which represents more than 370 town halls in England and Wales, urged the Chancellor to bear the issues in mind when finalising the Spending Review.

Chairman Gary Porter said: “Our new analysis shows the significant spending pressures facing councils over the next few years even before the possibility of further funding reductions.”

“Enormous pressure will be heaped on already stretched local services if the Government fails to fully assess the impact of these unfunded cost burdens when making its spending decisions for the next five years.”

Roberto Moretti, CEO at Oxygen Finance Ltd, added: “We recognise the outstanding achievements that councils are making to protect vital frontline services. Anything that can be done to alleviate and partly offset the enormous financial pressures that councils are facing has to be a real positive.”

He continued: “It has never been more important to consider alternative income streams. The fact that Oxygen’s early payment programmes are risk free, non-invasive, fully-resourced and are proven to generate substantial income, whilst accelerating the flow of cash to suppliers is obviously a massive benefit to the increasing number of local authorities adopting our programmes and their supply-chains.”