Council leaders have insisted they should “have the discretion to set their own council tax level” despite a pledge by SNP ministers to freeze the charge in the next financial year.

The Scottish Government has offered local authorities a share of £144 million to cover the funding equivalent to a 5% rise of the charge as part of the freeze.

But many councils were anticipating hiking the charge by more than 5% to mitigate squeezed budgets, so have been left out of pocket.

Local authorities are already proposing hiking council tax next year, flying in the face of the SNP’s pledge to freeze the charge.

Read more: Council chiefs to urge SNP to allow capped rise to council tax

In crunch talks today, council leaders have welcomed the £144 million offered by SNP ministers, but have insisted that local authorities should be able to set council tax rates.

As well as the funding gap over council tax, local authorities face a £63 million cut to day-to-day revenue spending and a £55 million cut to capital budgets.

Cosla resources spokesperson, Katie Hagmann, said: “Leaders were clear today that as well as the £144 million, councils should still have the discretion to set their own council tax level.

“Cosla’s analysis of the £144 million is that it does not fully fund a council tax freeze due to cuts to our core budget.”

Read more: Analysis: Scottish council funding as usual won't cut it

She added: “Leaders also highlighted that in relation to the pay claims now being received from our trade union colleagues, there is no additional money for pay in the budget as it stands and that this will endanger local jobs and services.

“Leaders agreed to lobbying both UK and Scottish governments in relation to funding for pay.

“Finally in relation to the recent announcement of an extra £600 million funding from the UK Government for councils in England, leaders were clear that the full Barnet consequentials should be passed to local government, from the Scottish Government, without any conditions or direction on spend.”

Councils are already considering hiking council tax, despite the Scottish Government’s pledge to freeze the charge.

One option being put to councillors in Inverclyde is to raise council tax by up to 9%.

A report to a meeting of the full council next week puts forward “the option to consider increasing council tax in 2024/25 and not accepting the council tax freeze grant as an alternative to the potentially significant savings requiring to be agreed”.

Read more: Scottish councils facing 'unprecedented financial pressures'

It adds: “Any council tax increase in 2024/25 would have financial implications for the council as well as many households in Inverclyde.

“However, this may be preferable to elected members if it limits reductions to council services.”

Officials have put forward one of several options that states that “based on the remaining estimated funding gap of £0.7 million in 2024/25, then a 9.0% increase in council tax in 2024/25 would effectively address the estimated remaining 2024/25 funding gap whilst also freeing up £0.74 million from reserves being used to top up the shortfall in council tax freeze grant in 2024/25”.

Council officials in Edinburgh have investigated the impact of raising council tax despite the freeze, and concluded that the city council would be better off financially as no penalties have been proposed by SNP ministers.

A report by council officers in the capital sets out that “beyond withholding of funding dependent on freezing council tax rates” by SNP ministers, “it is officers’ understanding that no specific penalties or sanctions would be applied in the event councils choose to raise these”.

A Scottish Government spokesperson said: “In the face of a profoundly challenging financial situation, the Scottish Government is making available record funding of more than £14 billion to councils in 2024-25 – a real-terms increase of 4.3% compared with the previous year if the council tax freeze is accepted.

"The £144 million for the council tax freeze would be equivalent to an above-inflation 5% rise in council tax nationally.”