SCOTLAND'S councils have reported a financial surplus of £450million for the past year and currently sit on cash reserves of over four times that, official figures show.

In the annual overview of where the country's 32 councils spend and raise their money, Scotland’s Chief Statistician has revealed that revenue reserves have increased in the past financial year by around 2.6 per cent to £1.89billion.

The surplus has also risen by around £100m between 2014/2015 AND 2015/2016.

Finance Secretary Derek Mackay said the statistics show the Scottish Government had treated councils "very fairly" in their budget settlement.

But the body representing the vast majority of Scotland's councils said it was "extremely disappointing" that Mr Mackay was linking growth in reserves "with a fair settlement", adding that misrepresentation of budgets was confusing to the public and damaging the role of local government.

Spending on services increased by 0.7 per cent to £10.1bn in 2015-16, with just under half, £4.7bn, going on education.

A further £3.2 billion was spent on social work services.

The Government said the figures "were produced by independent statistical staff free from any political interference, in accordance with professional standards set out in the Code of Practice for Official Statistics".

The come on the back of what has become an annual row between local government and ministers over the declining share of the national budget received by councils amid increasing pressures, demands and debts.

The amount paid by councils on interest and debt repayments stood at £1.5bn in 2015-16, up 2.5 per cent on 2014-15.

The organisation also said it could never endorse the cuts to its core settlement contained in the 2017/18 budget.

Mr Mackay said: "In the Budget Bill 2017-18, passed by Parliament only last week, the local government finance settlement plus the other sources of support available through the actual and potential increases in council tax income, and the support through the health and social care integration, amounts to an overall increase of potentially over £400 million, or 3.9% in cash terms or £250 million or 2.4% in real terms.

"This is a package that not only delivers the best deal for taxpayers and public services in the whole of the UK, but a fairer and stronger country."

But David O'Neill, president of Cosla, said: "Both Cosla and Audit Scotland have highlighted on numerous occasions that due to the fact councils have been provided with one year spending reviews and gloomy financial forecast,  councils have acted responsibly in 2015/16 to build reserves to both smooth saving plans and fund transformation programmes.  

"Particularly given the late nature of both this year and last year budgets from the Scottish Government, longer term planning is essential to reshape and redesign services not only in light of the cuts but also the increasing demand for services."

He added: “What the stats do show us is that despite challenging financial circumstances councils continue to prioritise spend in front line services and despite the real term reduction in funding of 11 per cent over five years the vast majority of productivity, output and outcome measures within councils have improved.”

A Scottish Labour spokesman said: "Under the SNP the budget for locals services like schools has been cut by £1.5billion since 2011. That is why there are 4,000 fewer teachers, and the gap between the richest and the rest in our classrooms is growing. These cuts will hit everybody, but hurt the poorest hardest. 

"Instead of cutting local services the SNP should back Labour's plan to use the powers of the Scottish Parliament to invest in our communities. At Scottish Labour Conference Kezia Dugdale announced a proposal to top-up Child Benefit by £240 per year, lifting 30,000 children out of poverty. That's the kind of action we need to see from the Nationalists, instead of pushing for yet another independence referendum."

A report for the Accounts Commission published towards the end of 2016 found local authorities were generally in good financial health in 2015/16.

However it warned rising demand for services and falling income could cause problems in the future.

Councils have been dissatisfied with their funding in recent years, with umbrella body Cosla stating the 2016/17 settlement is "totally unacceptable".