Scottish councils will continue to face increasing financial pressures unless they ‘stop, reduce, or significantly redesign’ services, the Accounts Commission has warned, as new figures reveal a £529m budget gap for 2026/27.

The gap amounts to around 3% of councils' revenue funding, despite a 2% real-terms increase from the Scottish Government – much of which covers existing commitments like teachers' pay rises.

Capital funding has fallen 15%, forcing councils to borrow more for infrastructure, according to the latest report from the Accounts Commission.

Council tax rose by an average of 7.7%, raising £248m extra, while councils plan £180m in savings that will increasingly hit services people rely on.

Accounts Commission member Derek Yule said savings options are limited and councils must talk to communities about the difficult decisions ahead.

‘As things stand, councils will continue to face increasing financial pressures unless they stop, reduce, or significantly redesign services,’ he said.

‘Savings options are limited and will have to increasingly focus on changes to services people rely on. That makes it essential that councils talk to their communities about the difficult decisions they are facing.’

COSLA's Ricky Bell said the report strengthens the case for fairer funding, citing ‘critical financial pressures’ on health and social care partnerships.

‘The report quite rightly expresses grave concern for local government finance over the medium term, spanning from the Scottish Spending Review,’ he added.

‘Whilst councils are being forced into damaging cuts, we are also expediting service transformation, which must be recognised as we begin to consider our role and expectations in Public Service Reform.’