Councils have been changing how they work and deliver services for years, making significant savings. Now the spending watchdog has said the scale and pace of change must shift to match the challenges ahead, helping secure financial sustainability and meet increasing demand.

As councils redesign services, the Commission said they must learn from and work with each other, building on the many initiatives already in place. There remain, however, significant gaps in how councils are planning for the changes ahead, it added.

Councils need to set out clearly the benefits to communities of service redesign and show they have understood the impact on vulnerable groups.

Jennifer Henderson, member of the Accounts Commission, said: “Whilst councils have been changing how they operate and deliver services for many years, a shift in pace, scale and ambition is needed. Plans to redesign services must be sufficiently ambitious to meet the scale of current and future challenges. Delays could risk greater costs, tougher decisions and increased challenges in future years.

“Local and national collaboration is vital. Councils must learn from each other, and be clear with communities why change is needed, the benefits and impacts. This is vital given changes to services can significantly affect people’s lives. Failing to fully engage with communities risks councils having to withdraw plans, facing legal challenge and having to find savings elsewhere.”

COSLA welcomed the report for highlighting “positive examples of transformation across councils” while also setting out the “significant challenges local government faces in making further progress”.

Cllr Steven Heddle, COSLA vice president, said: “As the report recognises, there is strong innovation happening across local government. This can be seen both locally and nationally. However, councils continue to be constrained in what they can achieve while budgets remain under sustained pressure and demand for services continues to rise.

“Councils are the part of the public sector closest to communities, bringing a high degree of transparency, accountability and public expectation. At the same time, local government budgets have faced disproportionate pressure compared to other areas of the public sector.

“COSLA and local government partners will continue to work with the Scottish Government to drive transformation through the Public Service Reform agenda. Delivering efficiencies through reform will also require all parts of the public sector to work together and look beyond council services, where significant savings have already been made.”