A LACK of policy changes or redesign of their services could see some Scottish councils spend almost 80 per cent of their budget on two key areas – education and social work – by 2025, according to the local authority watchdog.

And finding savings has become “increasingly critical” for authorities who are dealing with ongoing reductions in funding, with “decisive leadership” being called for, says the Accounts Commission.

Its annual report published today highlights that councils are balancing a real-terms funding cut of 9.6 per cent over the last eight years with increasing demand, particularly from a growing older population.

The report found that some councils have managed to maintain or improve their performance in several areas despite budget cuts – while they are spending less on secondary schools, for example, pupils from all backgrounds are performing better.

Other evidence suggests that budget cuts are having a negative impact, says the watchdog, with public satisfaction falling in areas such as refuse collection, street cleaning and libraries.

The commission says adult social care services are not keeping up with demand, with older people facing long waits for an assessment of their needs and a further wait for their care package.

It adds that some services have borne the brunt of funding reductions, with planning department staff numbers being cut by more than a fifth in the last decade, and environmental staff by eight per cent between 2016 and 2017.

Some councils could – under the current funding formula – receive less cash from government as their total population falls but the number of old people, and associated demand for services, increases.

The watchdog warns that without service redesign or policy changes local authorities could be spending nearly 80 per cent of their budgets on education and social work alone by 2025/26.

Accounts Commission chair Graham Sharp said: “Councils are facing the major challenge of reducing costs, maintaining services for an ageing population and putting significant policy and legislative change into practice – all at a time of increasing uncertainty.

“They have done a lot to manage the impact of budget reductions, but with forecast funding gaps higher than current levels of reserves for some councils the delivery of savings is now increasingly critical.

“Decisive leadership, innovative thinking around service delivery and robust planning based on community engagement is now more important than ever to ensure council services stay sustainable.”

Responding to the report, Finance Secretary Derek Mackay said: “Despite UK Government cuts to the Scottish Government’s budget we have treated local government fairly and in 2018-19, councils will receive a £10.7 billion funding settlement, providing a real-terms boost in spending.

“In addition we are investing £750 million over the course of this Parliament to tackle the poverty related attainment gap and ensure every child in Scotland has an equal chance to succeed.

“In the current financial year almost half a billion pounds of frontline NHS spending will be invested in social care services and integration.”

Local authority body Cosla welcomed the report, which it said recognises that despite substantial funding cuts councils continue to deliver essential services for their communities as best as they can.

Gail Macgregor, Cosla’s resources spokesperson, added: “One-year settlements are debilitating for councils – Cosla is clear that we need multi-year settlements to enable us to provide long term, sustainable, efficient and effective financial planning and essential service delivery.”