FINANCE Secretary Kate Forbes has refused to acknowledge local councils’ fear they face a £100 million funding black hole in next year’s Budget.

In setting out her Budget earlier this month, Ms Forbes announced the funding for local authorities will be at a virtual standstill next year, rising just £40m to £11.1billion – raising the prospect of council tax hikes to mitigate the real-terms cut.

Ms Forbes said there was “real terms growth” in the settlement for local government and protected the core budget “in cash terms”.

Cosla, the umbrella organisation for Scottish councils, said the draft settlement will have a “disastrous impact” on authorities – warning frontline services are already in a “fairly precarious position”.

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Ms Forbes was pressed by Tory MSP Douglas Lumsden at Holyrood’s Finance And Public Administration Committee over the warnings from Cosla.

But the SNP minister suggested Cosla had used funding allocated for Scottish Government priorities that councils will deliver as part of their calculations.

She said: "In terms of the core budget which is protected in cash terms, I don't recognise the £100 million figure that local government is using.

"As far as I'm concerned, if you compare last year's core budget to this year's core budget, you will see protection in cash terms.”

Ms Forbes added: “Of course, the argument could then be made that it doesn't take into account the impact on inflation.

"I can't inflation-proof any part of the Scottish Government's Budget, such is the nature of inflation right now."

Gail Macgregor, resources spokeswoman at Cosla, said the settlement for local government “represents a £100 million cut to our core settlement, before any other pressures such as National Insurance costs, pay or inflation are taken into account."

The Finance Secretary was also asked to clarify where an extra £200 million was found from her Budget for emergency Covid funding to support businesses and self-isolation amid the Omicron surge.

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Ms Forbes said she has “basically gone through the whole budget to identify what portfolios can contribute or allocate additional funding anywhere in the budget”.

She added that there are now “some schemes and initiatives” the Scottish Government will “now need to manage over a longer time period”.

Ms Forbes added: “The funding comes from a whole range of different sources so it’s painstakingly built up of funding that was otherwise earmarked for different initiatives and different schemes.

“In my own budget, there were elements around employability, in the health budget there was areas around business that they were intending to undertake.”

The Finance Secretary stressed projects will now need to be delayed but warned “we will get into the territory of things being stopped completely if there is no more funding forthcoming”.

The Finance Secretary said she has “maximised the funding available to us”, adding that “there is no funding that I’m withholding or sitting on”.

Ms Forbes was asked how the £20 million announced in the Budget for the North East and Moray as part of the transition away from the oil and gas sector.

The Finance Secretary said she was set to engage with local groups “on the specific of how it is being spent” and “figure out the best way of deploying it”.