The report,Work in Progress: Meeting local needs with lower workforce costs, details how councils have used measures such as reducing overtime and bonuses, paying senior staff less, cutting agency staff and consultants, freezing recruitment, extending part time work and reducing higher paid staff numbers.

But with an annual pay bill of almost £30 billion and budgets shrinking by over a quarter between 2011/12 and 2014/15, restructuring services are essential to counteract an estimated 145,000 job losses in the last year, with the figure set to rise in the future.

LGA chairman, Sir Merrick Cockell said: ‘Councils have been ahead of the game in making savings and have already started to reduce workforce costs. Unfortunately, job losses are inevitable given the scale of cuts.’

‘Where these are necessary, councils are working hard to minimise disruption to staff and services through restructuring, shared services and outsourcing.’

Audit Commission Chairman Michael Higgins also warned that as councils are large local employers, with staff costs accounting for more than half of their expenditure, tailored local approaches are needed to reduce costs.