John Swinney hints at the end of benefits for all

• John Swinney: reining in. Picture: PA

Amid warnings from Scottish ministers today that the days of extra spending are over, council chiefs have spelled out bluntly that "universal benefits" must be cut, with cash focused solely on the poorer sections of society.

It could spell the death knell for a series of benefits handed out by ministers since devolution, such as free bus travel for pensioners and free personal care. The stark warning follows a report by the Scottish Government's chief economic adviser, Dr Andrew Goudie, last week which forecast that the 30bn budget will be cut by 5bn by 2015.

Ministers are awaiting the findings of an independent budget review group, which will report at the end of this month, offering options on cuts. The group was set up by finance secretary John Swinney to examine how best to cut back on spending.

Public sector chiefs have told the group that it must include a "recognition" that some policies, especially those based on universality, such as free personal care, may not be affordable in the future. Fife Council chief executive Ronnie Hinds told Scotland on Sunday: "Efficiency savings are not going to be enough. They will act for considerably less than half of what will have to be required. It is going to come down to hard political choices."

He added: "Over the medium term, we need to be looking at things like free personal care and also universal provision for concessionary bus travel." He concluded: "Those in the greatest need should have the greatest protection."

The group is also believed to be considering a series of submissions that argue for a minimum two-year pay freeze for all public sector workers from April next year. Public sector bosses warn that with 60 per cent of budgets spent on staff, they cannot save money unless salaries are capped.

With the scale of the cuts required now becoming clear, ministers are to hold meetings across Scotland to keep public opinion onside. They are conscious of the scenes in Greece this year when austerity measures similar to what may be required in the UK triggered riots on the streets.

Swinney gave a clear hint last night that the provision of services would have to be scaled back, warning: "The days of simply deciding where to spend extra money are going for the foreseeable future. Instead, we all need to focus on how to deliver the things that really matter."

All eyes will now be focused on the review group's report, expected on 29 July. Headed up by former Scottish Enterprise chief executive Crawford Beveridge, it is expected to pull no punches on the measures required to reduce budgets.

The review group has refused to rule out selling the publicly-owned Scottish Water utility, in a move which would save ministers 150 million a year in subsidy. Free personal care for the elderly was introduced by former first minister Henry McLeish in 2001 amid warnings that it would soon end up being unaffordable. It was ruled out south of the Border on cost grounds.

Statistics have shown that the bill for personal care for people living at home has doubled to 257m a year. That rise is likely to continue as a result of Scotland's ageing population.

Set against that rise, the Scottish Government last week laid out what it claims will be the long-term impact of the squeeze on public spending, saying that over the next 16 years, its income will be reduced by 42bn on current levels. It also warned that real-term cuts in spending could be expected for six years.

Along with cuts to universal benefits, the independent review group has been warned that the council tax freeze will be equally unsustainable as the cuts begin to bite.z