Local government to lose out again as chancellor unveils new round of cuts George Osborne will try to put Labour on the back foot by challenging Ed Balls to accept the need for further cuts after 2015-16. Local government will again be the biggest loser on Wednesday as the chancellor, George Osborne, unveils £11.5bn of overall spending cuts in 2015-16, an end to automatic pay progression, and a further round of public-sector job losses. Local government is expected to get a 10% budget cut in Wednesday's spending review. But, in what will be the last set-piece announcement of spending cuts before the election, Osborne confirmed that the budgets for health, schools and international aid would be protected. Funding for security services will also be well shielded from cuts, and the budget for MI5, MI6 and GCHQ could rise. Osborne is also preparing to unveil details of a consultation on a long-term welfare spending cap, which would cover disability benefits and housing benefit. In a bid to pre-empt the chancellor on what is certain to be a highly political day, Labour has accepted the principle of a structural welfare cap and overall current spending totals for 2015-16. But Osborne will try to put Labour on the back foot by challenging Ed Balls, the shadow chancellor, to accept the need for more cuts in the two years after 2015-16, and to admit that Labour's plans involve borrowing more, before and after the election. Osborne is also expected to announce measures to end duplication in the delivery of local services, through an initiative called community budgets, which is expected to be capable of saving as much as £4bn in a single year. He is also to set out the size of the single local growth fund, created in response to Lord Heseltine's growth review last year. Heseltine suggested a pot of £49bn over four years, but is likely to end up with a much smaller sum due to resistance from the business department. The chancellor is likely to say he will look - albeit without commitment - at proposals from the finance commission of London's mayor, Boris Johnson, which deal with a radical devolution of tax-raising powers, such as stamp duty and council tax, in the capital. Grant Shapps, a former housing minister in the Department for Communities and Local Government, spelt out the plan for a further 10% cut, saying this could be won via efficiencies, without need for frontline services cuts. A lot of that is credit to them, because they have managed to cut their cloth more intelligently. He said council cash reserves had risen. If they are that cash-strapped, how are they managing to put more money into their reserves? The insurer Zurich Municipal said local government had shed more than 416,000 staff since 2010, equivalent to a 14.3% fall, taking the total to a record low not seen since September 2006. But with more spending cuts to come a further 16.1% fall in jobs is expected by the end of 2017-18, equivalent to 484,000 staff. In the budget this year public-sector pay awards were to be limited to 1% in 2015-16, but reform to the system of "automatic progression pay would bring further savings": even in an era of public-sector pay restraint some people were still receiving annual pay increases of 7%. Danny Alexander, the Liberal Democrat Treasury chief secretary , and a central figure in the negotiations over the past year, is expected to announce a further extension of community budgets. All authorities will be told they can "take advantage" of the lessons from the four whole-place community budget pilots - Greater Manchester, Cheshire West and Chester council, the west London tri-borough project, and Essex. These involved the redesign of both council and central government services around a single funding pot. Alexander will make a separate "good news" statement on Thursday setting out government plans for investment in specific infrastructure projects, such as the A14 corridor in East Anglia. The spending review will give a long-term approach to capital planning, including setting planning assumptions up to 2020-21. The business secretary, Vince Cable, was the last cabinet minister to settle on Sunday night, and is believed to be pleased he has protected budgets for apprentices and science. But there is concern that further education has taken a hit. In an effort to show the Treasury he was serious about cutting costs Cable commissioned external advisers to look at ways of bringing down the running costs of the department. Chris Leslie, the shadow financial secretary to the Treasury, said: "This spending review is happening because David Cameron and George Osborne's economic plan has failed. Three years of falling living standards and a flatlining economy has led to billions more borrowing to pay for economic failure. Far from balancing the books by 2015, as the government promised, the chancellor is being forced to make even more cuts.