No sacred cows as council budgets are slashed by billions, warns Cosla chief

The severity of the situation led Mr Watters to insist there would be "no sacred cows" when it came to finding savings and warned that public services would have to take a hit. Savings will have to be found in education, police, the fire service and care budgets, he told The Scotsman.

He said discussions would be held across the public sector about ways to make more savings, suggesting that the NHS would not be immune from the cuts.

Mr Watters also said quangos – some of which have been criticised for the bonuses they pay top staff – should be made more accountable for the taxpayers' money they spend.

Cosla has forecast that the 12bn budget of Scotland's 32 local authority's will be cut by 4-5 per cent in 2011-12 – a cut that would result in up to 600 million going from its funding settlement. That follows the 178m that was slashed from the Cosla budget this year.

Similar cuts of 4-5 cent are expected for 2012-13 and 2013-14. In the worst-case scenario, a total of up to 1.8bn could be lost during the 2011-14 spending review.

Over the same period, councils expect to see a 5-10 per cent increase in demand for their services.

"We have never experienced anything like this. We are talking about a 10 to 15 per cent reduction over the next three-year period in resources that are available to us," Mr Watters said.

"That will continue for the next two or three three-year spending reviews. And we are going to see similar reductions in other parts of the public sector. So there should be no sacred cows when it comes to making savings. We really need to start discussing this with communities and how we intend to manage the situation."

Mr Watters was speaking on the first day of Cosla's annual conference at the Fairmont Hotel, outside St Andrews.

Earlier, First Minister Alex Salmond addressed delegates and spoke of the importance of maintaining the level of the budget promised to Scotland for 2010-11.

Mr Salmond repeated his plea that any reduction in Scotland's budget made by an incoming Tory or Labour government in an emergency budget would harm the recovery.

He said: "This government will not sit idly by and accept cuts imposed from Westminster.

"Scotland's local authorities and public bodies are working hard to finalise their budgets and further cuts could damage public services and Scotland's economic recovery."

Mr Salmond added: "The Scottish Government is demanding no reopening of 2010-11 spending plans. Local government representatives, including Cosla political group leaders, have also made this case."