While recognising that councils have been transforming how they operate and deliver services for many years, the Commission’s latest report on transformation in councils said further reform is “increasingly urgent”.

Councils have “never faced such acute challenges, putting budgets and workforce under severe stretch and strain”, the report added.

The Society of Local Authority Chief Executives (Solace) and the Improvement Service have established an ambitious sector-led Transformation Programme. The Commission said this represents a positive change to how councils work towards transformation, but work is at an early stage, and there are significant risks around workforce capacity and skills to realise ambitions, given the need to continue delivering vital services every day. 

Councils cannot deliver the required reforms alone, the watchdog said. It is essential that all relevant public bodies, including the Scottish Government, alongside community planning partners, third sector and communities, recognise the urgent need to collaborate to help deliver the change needed.

A determination from both Scottish and local government to deliver on the commitments made in the Verity House Agreement is also critical. This will support the development and delivery of local government transformation, helping secure future local services and finances.

Jennifer Henderson, Accounts Commission member, said: “Local government has been transforming how they deliver services for years. But given growing demand and ongoing financial pressures, councils must now move with an ambition and pace we’ve not yet seen if they’re going to successfully address the financial sustainability, workforce and service challenges they’re facing.

“To protect vital services, to pivot to prevention and increase the pace of collaboration, councils must commit to and sustain their own transformation programmes, whilst collaborating with sector-led work.”

“Successful delivery of transformation programmes is essential to achieve financial sustainability and improve the lives of individuals and communities. Collaborating with others, both within and out with local government, will be a key part of the solution.”

Scottish Labour local government spokesperson Mark Griffin said the report “lays bare the huge pressure councils across Scotland are under”.

He added: “For years the SNP has hollowed out council budgets and lifeline services across the country have been cut to the bone as a result.

“We need real leadership from the Scottish Government to help councils deliver the reforms needed to make sure local services are fit for the future.

“The SNP must stop inflicting brutal cuts on local government and instead support councils in reforming and modernising these vital services.”

Lib Dem economy spokesperson Willie Rennie said: “The SNP have taken deliberate decisions to starve Scotland’s councils, sometimes as a budget gambit, sometimes as a stunt and sometimes because their own bad decisions have left them short of funds.

“Humza Yousaf committing to a council tax freeze on a whim so that he had something to announce at SNP conference was the absolute nadir of this approach.

“Local government deserves respect, long term funding deals and a commitment from the Scottish Government to work in partnership.”

Responding to the report, Shona Robison, cabinet secretary for Finance and Local Government, said: “The report from the Accounts Commission recognises collaboration and transformation is vital to protect public services. This aligns with this government’s core priorities of ensuring the delivery of effective public services, eradicating child poverty, growing the economy, and prioritising net zero.

“Despite the decision of the previous UK Government leaving the country in a challenging financial situation, the Scottish Government has made available record funding of over £14bn to local councils this year – a real-terms increase of 2.5 per cent compared with the previous year. We will also continue to work with Cosla to empower councils through a new fiscal framework.”