Delivering the 2018-19 Draft Budget to parliament yesterday, finance secretary Derek Mackay announced that local authorities will receive more than £10.5 billion in 2018-19.

Mr Mackay said despite a cut of over £200 million to Scotland’s block grant by the UK government, the 2018-19 Draft Budget delivers a fair funding settlement for local authorities.

The minister said: “The Scottish Government has continued to ensure that our partners in local government receive a fair funding settlement despite further cuts to the Scottish Budget from the UK government.

“We have protected day-to-day local government spending, while increasing the capital budget. Local authorities will receive more than £10.5bn through the local government finance settlement in 2018-19.

“We are using our tax varying powers to boost investment in public services, and if local authorities choose to use their powers to increase Council Tax, by up to 3 per cent, they will have an overall real-terms increase in the funds at their disposal, to support local services.”

Responding to the announcement, COSLA warned that it is not a flat cash settlement and said it is disappointed that there is a cut of £60m to local capital funding.

Councillor Gail Macgregor, COSLA’s resources spokesperson, said: “I would like to start by putting on record the engagement the Cabinet Secretary has had with us to meet the pressures that we have presented, particularly in relation to our shared priorities.

“That said, the reality is that this is not a flat cash revenue settlement for local government. It is a cut of £153m for essential local government services.

“In addition to this, while COSLA is fully supportive of wider capital investment we are disappointed that there is a cut of £60m to local capital funding.

“There are serious financial challenges that lie ahead in several areas and there is no doubt that these will have an impact on the essential services that councils deliver. A particular issue is public sector pay if this is not fully funded.

“Whilst councils have the ability to raise council tax in their local area that is a decision they will take based on local needs and circumstances and is subject to a 3 per cent cap which has been imposed on councils by the Scottish Government.

“The current Spending Review process makes it extremely difficult for councils to set medium and long term financial plans due to short term funding and annual settlements.”

Councillor Macgregor added: “The discussions in relation to this year’s settlement between COSLA and Scottish Government have been both positive and constructive.”

COSLA President Councillor Alison Evison said: “COSLA has been engaging with all political parties across the Parliament throughout this process and, as this is a draft budget, we will continue to defend essential services over the coming weeks.”