Ministers have been accused of targeting the poor through a fresh squeeze on council spending in England and by scrapping a crisis loans scheme.

The row broke out after the Government detailed a budget settlement which councils warned would force them to make savings of £2.5bn. It also confirmed the abolition of a Whitehall scheme to provide emergency help for vulnerable people facing one-off costs such as a broken cooker or cleaning up after flooding.

Kris Hopkins, the Local Government Minister, said councils’ spending power would drop on average by 1.8 per cent, falling to 1.6 per cent when other grants are factored in, with no council suffering a loss of more than 6.4 per cent. Mr Hopkins said the Government had “yet again delivered a settlement that is fair to all parts of the country, whether… urban or rural”.