The Local Government Overview 2019 report by the Accounts Commission warned that while councils are managing to improve and maintain most services, government funding is likely to reduce in future.

This, combined with increased demand and less flexibility over spending decisions, means councils need to think differently about how they deliver services to the public, it added.

The report said that some services are beginning to show signs of pressure. Nearly 70% of councils’ spending is on social care and education, and more money is being committed to Scottish Government priorities. This leaves councils less flexibility in where to spend and where to save.

At the same time councils are facing increased demand. All councils will see a continued rise in the number of people aged 65 and over, and ten councils an increase in the number of children under 15.

Graham Sharp, chair of the Accounts Commission, said: “It’s important to recognise that councils are working hard to maintain and, in some cases, improve services. Now fundamental change is needed to ensure services meet the shifting demands of local communities, with councils working and collaborating with communities to deliver the change needed. Councils must now focus on changing how front-line services are designed and delivered.”

Local government body COSLA has welcomed the report which it said chimes heavily with similar recent reports showing that despite substantial cuts in funding councils continue to show strong performance in key service areas and deliver essential services for their communities.

COSLA’s resources spokesperson Councillor Gail Macgregor said: “Today’s Accounts Commission report, like other recent independent reports, clearly shows that Councils have performed well and continued to deliver essential services for their communities over the last year despite the severe financial challenges that they face.

“Today’s report also makes clear that difficult times and choices lie ahead - coupled with continuing pressure on our finances.”

Councillor Macgregor added: “It is pleasing that the report also supports COSLA’s position presented in our recent #essentialservices and Budget Reality campaigns, and is especially helpful in highlighting the multiple new policy areas which Local Government will deliver.

“It also points out that firstly, councils increasingly have less say over the budget they have for other services that they deliver with education and social work being protected, and secondly, that there has been an ongoing real team funding reduction for Local Government between 2013/14 and 2019/20.

“It is for a combination of all these reasons that COSLA strongly lobbied the Scottish Government this year for a fair settlement for the essential services councils deliver to their communities.

“We hope that eventually our message will be heard by Scottish Government, and they recognise our asks, we are not simply saying these things for the sake of it.

“Reports such as today’s from the independent Accounts Commission clearly outline the harsh reality that councils face on the ground in terms of frontline essential service delivery – and that the current financial treatment of local government is not sustainable nor in anyone’s interests especially our communities who rely on vital services.”