The government has threatened to hold a local public inquiry into Sheffield city council’s decision to hand over the keys to half of the city’s libraries to community volunteers following funding cuts. Local MP David Blunkett said it would be “breathtaking cheek” for the government to intervene.

The culture minister, Ed Vaizey, recently wrote to the authority to request information on how it was implementing £1.6m of cuts to its libraries, to make sure it had met its legal obligation to provide a comprehensive and efficient service.

Eleven Sheffield libraries were at risk of closure before the council earlier this year offered financial support to allow volunteers to take them over. Mazher Iqbal, Sheffield council’s cabinet member for communities and public health, said the work of these volunteers “has been nothing short of heroic”.

The Broomhill Library Action Group lodged a legal complaint over the council’s approach to using volunteers, arguing that its needs assessment was flawed and a quarter of Sheffield’s residents had been left without access to a branch.

Sajid Javid, the culture secretary, will review the authority’s response to the request for more details before deciding whether to initiate a local public inquiry at the end of the month.

Vaizey wrote: “The secretary of state’s present position is that there is insufficient information to enable him to decide whether a local inquiry is necessary to resolve any real doubt or uncertainty about whether the council is complying with its statutory duty.”

The action group’s complaint cited the 1964 Public Libraries and Museums Act, which says the government can intervene if local authorities are not deemed to be providing a comprehensive and efficient public library service. Any inquiry would be the first initiated under the act by the coalition government. Vaizey declined to intervene in similar closure rows in Bolton, the Isle of Wight and Lewisham.

Blunkett, MP for Sheffield Brightside and Hillsborough, said: “The coalition government have breathtaking cheek. They have reduced the city council’s funding by £230m and next year matters get even worse. Council funding is now barely able to sustain basic statutory services for children and the elderly population. This is the direct consequences of the austerity programme and it is wishful thinking for people to believe that somehow there is no pain or impossible prioritisation.”

Government intervention would reopen the row about who bears responsibility for cuts to local services. Sheffield council says it is on course to lose half of its government funding by next year.

Libraries have been hit by a funding and staffing crisis in recent years, with the Chartered Institute of Public Finance and Accountancy reporting a net closure of more than 270 branches around the country since 2010. A loss of more than 3,000 library staff has been met with a 44.5% increase in volunteers last year alone.