We had someone report us to SS years ago. When I got to read the report etc after it all, one of the things they said was our son was in the park at night, alone, at 9pm. Our son was in bed by 8pm every night without fail, and although the park was visible from our house, he was never allowed in their alone - he always had to be with us, his older brother or a friend. He was 7 if I remember correctly.
Anyway, once I read that I realised that the person had either just made stuff up or had reported the wrong family/house! There was another kid in our road who was a right tearaway and was always out playing alone. He was a year or two older. I have always wondered if they meant to report that family.
Anyway, SS came out to talk to us, see our home, talk to the kids, etc. They also interviewed the kids at school away from us so we couldn't coerce answers I assume. They got permission from us to check medical records, etc. Once all over, they confirmed they found nothing at all that warranted a report. Whilst it felt awful at the time, afterwards I told myself that it's worth it for the chance that they do find and help an abused child.
A few years later I was talking to a neighbour who is also a friend. She was telling me that she had been reported to SS because her daughter was outside playing alone. Luckily, her daughter was adopted and SS basically laughed it off because they had spent so much time with the family through the fostering and adoption stages that they knew there were absolutely no issues. Obviously they came out and did some checks, but again such a waste of their time and resources.
I think I worked out who it was though - there was another woman on our street with a daughter my youngest son's age. One day when walking down the street, I spotted her then 3 year old daughter on the outside window ledge of an upstairs window! I immediately messaged her whilst walking to her house to knock on the door and let her know. She seemed grateful at that time. But thinking back the report came quite soon after that and I wonder if maybe someone else saw and reported her (I didn't, and I don't know if she was reported - it was an isolated incident, the daughter was fine and as far as I had always seen she was a good, loving mum) but she assumed it was me and so retaliated. Or maybe she wanted to get in there in case we reported her to make it look like we couldn't be believed. My friend also thought it was this woman that reported her, I can't remember why she thought it).
Anyway, there are always malicious people around - be open and honest with SS and they will close the file.
As for escalating it, I'm really not sure what else they can do. If they keep reporting up to SS they will surely get into trouble? If they report you to the council for noise they'll get laughed at. Just keep being a good mum and ignore the neighbour. Let your other neighbour know what's going on though, maybe ask them if there's any issue with noise from your house - that way you get a witness to say it's fine and normal household noise or you get someone else telling you that actually it sounds really loud in their house!
Good luck.