On Monday the Government announced its funding settlement for local authorities in England, setting out how much each council will receive over the next two years.
Funding for our local councils will be reduced, and I recognise that this will be challenging for them to deal with.
But as I know from my meetings with leaders and chief executives in West Sussex, local councils understand the need to deal with the largest peacetime deficit in our history.
And that the country must live within its means.
Last year, the Government borrowed one pound in every four that it spent. And we now spend more on debt interest - £43 billion a year - than on schools.
Local councils have grown significantly over the last 13 years and now employ over 2.2 million people, compared to 1.7 million in 1997.
And Local Government accounts for around 25 per cent of all public spending.
So we cannot shield local councils from the need to make savings - the key thing will be to protect frontline services as far as possible.
That means not simply making cuts but fundamentally looking at the way services are delivered.
West Sussex County Council is doing just that. They are looking to save £75 million over the next three years, but £60 million will come from efficiency savings.
They are also looking at new ways to deliver services, encouraging local groups to come forward to manage youth clubs for instance.
But if we want our councils to explore new ideas we have to give them more freedom and we're doing that through a Localism Bill.
So, for instance, we'll be scrapping targets and removing many of the ring-fenced grants that shackle local councils.
Local people will be able to veto excessive rises in council tax (which doubled under the previous government), decide what level of house-building is right for them and protect their local shops, pubs, libraries and leisure centres through a Community Right to Buy scheme.
I believe this is the right thing to do anyway, but when money is in short supply it's even more important that local councils are able to respond to what local people want.
It's time to put local decision-making back in the hands of local people.