Cuts to council-run services will bring dramatic reductions in children's services, libraries and youth clubs and a new wave of privatisation for frontline services, the most comprehensive survey so far of town halls will reveal today.

It shows the cuts, which will begin to really bite today as budgets for the 2011-2 financial year kick in, have been disproportionately targeted at the young. Youth clubs, play services and Sure Start centres are bearing the weight of above-average reductions.

The impact will be compounded by further cuts to libraries, cultural services, parks and leisure, triggering warnings that children and teenagers will be forced on to the streets with nothing to do.

The study, conducted by the Local Government Association (LGA), surveyed finance directors from 40% of local authorities. It also finds that two-thirds of councils are embarking on privatisation programmes to cut costs.

The communities secretary, Eric Pickles, has accused some councils of failing to rein in costs before making cuts to services. However, the LGA said the survey proved councils were doing everything they could but were faced with reductions in their grants of up to 17% this year.

"It's a matter of managing which services are cut. You can always trim a little from some things but to say you can do it without any strain on services is unrealistic," said Lady Eaton, who chairs the LGA.

She added that the pattern was for town halls to protect the most crucial services for the vulnerable, creating inevitable new gaps. "Only 5% of the total budgets are flexible – things like library services, cultural activities, youth services are not statutorily required.

"Now we're in a position that statutory responsibilities – education, social care, refuse collection – those come first. It's a sad reflection of the resources, it's the way the world is at the moment," she said.

Eaton also added that councils would like to make more profound reforms to save money but had been hampered by the government's decision to frontload the cuts this year. "When the cuts were front-loaded it didn't allow time for innovative thinking. You can't share your library services with another authority within a week," she said.

The biggest cuts are being made to central services – largely the back-office functions administration, human resources, finance and IT that residents do not see.

A third of councils have dipped into their reserves to prevent further cuts and nine out of 10 have already reduced the cost of senior staff, either through cutting numbers or pay. Seven in 10 councils are setting up shared services with other authorities to find new economies.

The survey asked finance directors to list the services facing above-average cuts. Some 58% said that their central services were getting greater spending reductions, 22% said services such as youth clubs and play groups, 16% said library services, 14% said early years services and 12% refuse collection services.

Some 63% are planning to cut Sure Start services. One in 10 said that their planning and economic development work would get a disproportionately high cut, raising concerns about the government's growth plans in those areas.

Anne Longfield, chief executive of the youth charity 4Children, said the cumulative effect would mean there was going to be "dramatically less for teenagers to do". She said: "Young people don't feel there are enough places to go and things to do even now. We are predicting that provision is going to halve one way or another. This will store up trouble. We're going to see troubling rises in crime [and] more early parenthood."

The survey found 63% of areas were protecting children's social care and 57% were protecting adult social care – the services that cater for the most vulnerable – with below average cuts. Another 21% said other services were being cut to preserve refuse collections.

Four out of five councils are cutting library services. The plans include transferring libraries to community groups to run, moving them into other public buildings such as schools, mobile libraries and other reforms including privatisation plans.

Private firms are springing up including Library Systems & Services, a Maryland-based chain which has set up in Liverpool with a target to manage 15% of local libraries in England within five years.

Nearly 80% of councils have, or are planning, pay freezes; a quarter are embarking on pay cuts.

The survey shows that 67% of councils are embarking on outsourcing programmes. Dave Prentis, the general secretary of Unison, said: "Outsourcing is a false economy, savings are over-promised and often fail to materialise.

"The dangers to workers and people who depend on outsourced services are huge. The evidence proves that the profit motive and public services do not mix. We've all heard the horror stories of home care – vulnerable elderly people left with sub-standard care as 15-minute slots are sold off to the lowest bidder."

The Department for Communities and Local Government said: "Every bit of the public sector has had to play its part to pay off the last government's deficit.

"Through shared services, reducing top salaries, increasing town hall transparency and improving procurement, councils are showing that if they cut out the waste they can do more for less and protect the frontline."

The key players

Margaret Eaton and Eric Pickles are both Yorkshire-born true blue Tories with a fondness for straight-talking. She is the Tory leader of Bradford council, where he served between 1979 to 1990 latterly in the same position. They go way back.

But in 2008 Lady Eaton became chair of the Local Government Association, and last year Pickles became the communities secretary responsible for the most severe cuts in councils' history. On the face of it that friendship has descended into an increasingly heated war of words.

Pickles has claimed in the Guardian that "big government" was as much to blame as the banks for the financial crisis accusing some councils of failing to cut chief executive pay while relishing cuts to services. Eaton, confounding expectations that she might be timid in the face of a Tory government, hit back accusing him of being "detached from reality".

Eaton attempts to settle that row by publishing a survey revealing that most councils are already doing what Pickles accuses them of neglecting: dipping into their reserves, cutting chief executive pay and merging back offices with neighbouring councils.

Eaton acknowledges that the timing of the cuts a month before the local elections, could make it difficult for Tory councillors. There are predictions that Labour could win up to 1,000 seats from Lib Dems and Tories voters disgruntled with the cuts.

"The Liberals as well will be under pressure because it's always pressure on the parties in government," Eaton says. "In many cases it's a case of a pox on all your houses ... people are anxious that when you've got your government in power you really know that it's harder."

Then she makes the startling admission that this May's elections could mark the start of a major come-back for Labour in local government. "It wouldn't be enough this year – but it would be if there was the same surge over a couple of years ... You could get to Labour being the largest party in local government in two to three years."

Remarkably, Eaton says that her friendship with Pickles has survived the tumultuous year. But she wants to end the most extreme rhetoric surrounding council cuts, and hopes that the survey is the evidence to settle it. Her message to Pickles? "Eric, we are doing our bit."