This is despite the fact that every single council in Scotland plans to cut spending on services in the next financial year, with around two-thirds of respondents cutting spending on education, parks and leisure, and business support. Alongside planned cuts, nearly all (97%) said that they would be increasing fees and charges, and nine in ten (89%) that they would be spending reserves.

The first annual LGIU State of Local Government Finance in Scotland survey, found more than three quarters of respondents (76%) believe these cuts will be evident to the public. Had it not been for the Scottish Government’s decision to unilaterally declare a council tax freeze, every council would have raised council tax, most often by a significant amount. The proposed council tax freeze has contributed to an increasingly poor relationship between the Scottish Government and local government, the report said.

The current state of the economy, manifested in high rates of inflation, affects wages, utilities and food, thus making service provision even more expensive for councils and was considered to be a problem by every respondent who answered. The associated cost of living crisis - which puts additional demand on services - was also considered to be a problem by over 90% of respondents.

There was widespread agreement on the most pressing issues in council finances: in addition to inflation, ring-fencing, staff recruitment, cost of living crisis and pressures linked to demographic change were all considered to be problems by more than 90% of respondents.

Adult social care and children’s services were considered the greatest shortest-term pressures on council finances, and adult social care by far the greatest long-term pressure.

Jonathan Carr-West, chief executive, LGIU Scotland, said: “Councils in Scotland are raising a red flag that council finances are completely unsustainable. With nearly a quarter of councils warning they may be unable to fulfil their statutory duties, it is only a matter of time before we see the first council in Scotland declare effective bankruptcy.

“Councils are pulling every lever available to them to balance their books. Every respondent said they were cutting spending on services, 97% that they would be increasing fees and charges, 89% that they would be spending reserves. But it is not enough. Councils have little to no confidence in local government finance and the issues behind the crisis are not going away.

“Scottish Government must work productively with councils to restore trust, remove ring-fencing, identify revenue streams and reform core funding for councils to ensure residents, and particularly the most vulnerable in communities, are able to access the services they need and pay for.”

COSLA’s resources spokesperson Councillor Katie Hagmann said the survey reinforces their key budget message that ‘Councils are Key’.

“It is important that the consistent concerns raised by COSLA are now being backed up by research from LGiU’s Scotland Survey,” she said.

“There is widespread agreement on the most pressing issues that are faced by councils at the moment. Inflation, ring-fencing, staff recruitment and retention as well as the cost of living crisis and demand pressures linked to demographic change have all been acknowledged.

“Additionally, LGiU’s survey rightly highlights the concerns around adult social care and children’s services and the incredible pressures on our council finances.

“Some of the statistics from the survey, whilst stark, also come as no great surprise to those of us in local government.

“Sadly, as this LGiU Scotland survey points out, our reality right now is extremely challenging - years of real-terms cuts to council budgets have been coupled with additional policy commitments.

“If this situation doesn’t improve, it will mean tough choices will have to be made. There is a danger that front-line, essential services that we currently provide, will cease. Services that not only address problems on the ground, but actively prevent more serious issues occurring down the line.”

Councillor Hagmann added: “Next week’s Scottish Government Budget is critical for Scotland and I continue to meet with the Scottish Government to highlight these pressing issues. As COSLA highlights in our ‘Councils are Key’ campaign, what councils deliver with and on behalf of our communities is key to creating the safe, healthy, vibrant and empowered communities we all want to see.

“Local Government holds the key to unlocking the potential in local areas, with its unique understanding of context, challenges and opportunities in individual local areas.”