EVERY local council in the North-East is in danger of going bust, a shock new analysis has warned.

The region’s town halls will be hit the hardest by the latest Government cuts, the study found, facing the biggest funding black holes.

The worst-hit authority will have funding for just 69 per cent of its expected spending, by 2020 – and even the best-placed will have just 77 per cent.

In every other region – bar London – there are some councils that will escape the pain and have the funds to cover expenditure.

There will be cash for few services other than essential social care and rubbish collection if the cuts continue, the Local Government Association said.

That means closures of other key services - such as libraries, road maintenance, school support schemes and youth clubs - are all-but inevitable.

Last night, Simon Henig, the Labour leader of Durham County Council, backed the warning, saying: “The LGA’s study is in line with our own figures.

“Every service we provide is going to have to be reduced in some way because of the situation we face. It’s going to be increasingly difficult.

“We know we will have to find at least another £100m of savings, of which £60m will not be identified until after we hold a consultation in the autumn.

“In future, the public services in an area will match the wealth of that area, instead of it being a level playing field between, say, the Home Counties and County Durham.”

The alarming findings come after the Coalition slashed town hall funds by a further ten per cent - £2.1bn - in last week's spending review, starting in 2015.

With councils already losing 33 per cent of their grants between 2011 and 2015, the financial black hole will reach a staggering £14.4bn, by 2020, the LGA said.

But its analysis reveals that – in every region, bar the North-East and London – there are some authorities that will still have sufficient funds.

The LGA does not indentify which authorities in each region are most likely to run out of money, without dramatic fresh cuts.

However, its study did highlight that the 50 poorest council areas, on the Government’s index of multiple deprivation, are in the greatest danger.

In the North-East, those 50 include Middlesbrough, Hartlepool, Redcar and Cleveland, Newcastle, Gateshead and Sunderland.

But, speaking to the LGA this week, Local Government Secretary Eric Pickles insisted all councils must make “extra effort to spend people’s hard earned cash ever more wisely”.

And he said: “Despite all the doom mongers’ predictions, the public now think their councils are delivering better value for money than before 2010.”