Councillors in a local authority need to show "demonstrable leadership" in a bid to cut spending by more than £16 million in the next two years, according to public spending watchdogs.

The Accounts Commission has called on elected members at Moray Council to act "decisively in making the difficult decisions required".

In its latest report on the local authority, it said improvements had been made and the "council is moving in the right direction".

But the "pace of improvement needs to increase significantly" at the council, which is run by an independent/Conservative administration.

The commission has highlighted the authority's lack of a clear vision, direction and political and corporate leadership in reports since 2006.

It said: "Since our last audit report, Moray Council has made progress on its improvement action plans.

"In particular, there is more cohesive strategic direction and planning in place, including a 10-year community plan, a more robust corporate plan and a linked system of service planning that includes arrangements for performance review and continuous improvement

"However, there is still much to be done. Recent progress has to be seen in the context of a relatively low starting point."

The report added: "Moray faces significant financial challenges over the next few years.

"It needs to reduce its spending by over £16 million by March 2018. At the same time, it needs to respond to increases in demand for many services."

The council's strategy in response to this "is still in its early stages", the watchdog added, stating "difficult decisions will need to be made and the delicate political balance in the council at present adds to this challenging environment".

The commission recommended the council "continue to build on the improvements on leadership and culture by acting decisively" to make the necessary savings.

Douglas Sinclair, chair of the Accounts Commission said: "Moray is moving in the right direction but needs to increase significantly the pace of change.

"Like all councils, Moray faces a big financial challenge. Councillors have the responsibility to make savings in the best interests of the people they represent whilst also ensuring they balance their budget."

Moray Council leader Councillor Stewart Cree said: "I welcome the Accounts Commission report and the acknowledgement it contains of the work done in Moray Council to address the challenges of the future.

"I note and accept that, like every other local authority in Scotland, difficult decisions will have to be made to balance future budgets and I can see no realistic way of achieving this without a substantial reduction in service.

"All councillors, of whatever political hue, will have to take a pragmatic view and recognise this reality in the budget setting process."

Moray Council chief executive Roddy Burns said: "We have already put in motion measures to deal with the engagement issues raised by the auditors, and these are starting to bear fruit."