In its annual financial overview published today, the Accounts Commission said funding from the Scottish Government reduced by 2.3% in real terms during 2017/18.

The reduction was largely offset by increases in council tax and councils’ fee income, with most councils applying the maximum 3% increase to council tax.

With further reductions in funding forecasted in the medium term, the watchdog said pressure remains on councils to make further savings and find ways to meet service demand more efficiently and effectively.

The report found that in 2017/18:

Graham Sharp, chair of the Accounts Commission, said: “Councils did a good job last year in managing resources as budgets are tightened and demands on them rise.

“The position varies from council to council but there is clearly need for continuing change in the way services are provided. It’s not been easy but the pressure on them - and the key services we all rely on - shows no signs of easing.”

The report also notes that while funding to Integrated Joint Boards (IJBs) increased in 2017/18 by three per cent, including additional funding from the NHS, the majority of IJBs have underlying financial sustainability issues. A report for the Accounts Commission and the Auditor General reported earlier in November 2018 that these financial pressures make it difficult for IJBs to improve services.

COSLA’s resources spokesperson councillor Gail Macgregor said the report “clearly recognises that councils have managed budgets well over the last year despite the challenges but that we face an extremely difficult time ahead”.

She added: “The Accounts Commission is correct to flag up the range of complex challenges we face and the continuing pressure on our finances.

“Its assessment is correct. As our Essential Services document shows there is no room left for manoeuvre, we really are at a cliff edge and our core budget is under real threat.

“We hope that the Scottish Government listens to the stark warning contained within today’s report from the independent Accounts Commission and funds local government and the essential services councils provide in their budget on 12 December.”

A Scottish Government spokesman said: “Despite continued UK government real terms cuts to Scotland’s resource budget, we have treated local government very fairly - and in the current financial year councils received a real terms boost in both revenue and capital funding.”