Officials have warned they are planning severe cuts at one local authority as pressure grows on council budgets because of a much tighter spending round.

Council management in Fife have warned of waiting lists involving "significant delays" for social work and children being forced out of residential schools, leading to disruption in mainstream classrooms.

Signs of pressure, particularly on social work budgets, follow major problems that have arisen for the flagship policy of free personal care for the elderly. As budgets are tightened, councils could cut back on such provision for more affluent elderly people, using last week's Court of Session judgment, that found those who arrange their own care in private care homes are not necessarily eligible for the £145-per-week payments.

Councils are currently spending £71m on such people, and have lawyers urgently examining the implications of Lord Macphail's judgment to find out if councils are now legally allowed to cut such payments, and also to examine an uncertainty left by the ruling that they might be legally required to axe them.

Health Secretary Nicola Sturgeon has sought to reassure elderly people that the ruling need not concern them. However, her reassurance applies only to waiting for personal care as the ruling found against Argyll and Bute Council for operating a waiting list, meaning a delay for elderly people between being assessed as needing personal care and then starting to receive payments for it.

She has also promised the government will honour a commitment to raise the £145 weekly payment from April, six years after it was introduced. It is not clear, however, if that commitment will lead to backdating inflationary rises for those six years, or to start from £145 as a baseline this year.

The latest evidence of budget pressure has been made clear by Fife Council, setting out the potential consequences of its budget forecasts. The authority has suggested it is only the first to put its head above this parapet, but that demographic pressures from growing numbers of elderly people living longer are sure to be putting similar pressures on other councils.

A budget announcement from Finance Secretary John Swinney is due next month that will seek to freeze council tax while expecting councils to cut class sizes and deliver large efficiency gains.

In a paper prepared for councillors, Fife social work officials outlined the prospect of waiting lists being created for care packages for young and old, involving "significant delays between assessment of need and service delivery".

"Prioritisation may result in lower priority cases experiencing significant waiting times and delays in receipt of service," the paper stated.

Those being discharged from hospital could be delayed, causing the knock-on effects for "bed blocking" in hospitals that health boards and councils have spent many millions trying to eliminate.

Hours of support provided by social workers could be cut to bring current delivery into line with lower budgets, while another method of responding to tighter spending would be social worker posts being deliberately left vacant.

The report also warns what would happen if the budget squeeze required children to be moved out of residential schools to their homes or foster carers, leading to problems in the community.