Nicola Sturgeon’s government has been accused of “losing its grip” after coming under pressure over squeezed local council budgets.

The First Minister has admitted that “absolutely it is the case” that “local government is struggling with these financial constraints”.

Labour leader Anas Sarwar pointed the finger at the Scottish Government amid concerns that local authorities will be forced into deep cuts to public services in the next year’s budget.

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Mr Sarwar told MSPs that “independent analysis shows that the budgets councils have control over have been cut by £304m in real terms” adding that it will lead to “devastating consequences for vital services”.

But Ms Sturgeon stressed that her government was “increasing local government budgets”, pointing to the draft budget she claimed would result in an increase of £570m.

The First Minister acknowledged inflation was impacting authorities, but stressed that was “not a result of policies of this government”, as she put the blame on the UK Government.

She added: “So absolutely it is the case that local government is struggling with these financial constraints as all parts of the public sector and households are struggling as well.

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“That is why it's important that we continue to support local government as much as we can.

“Obviously, the budgetary process is still underway and will conclude following the February recess of Parliament. We will continue to discuss with councils ways that we can help them mitigate the difficult situation they find themselves in.”

But the Labour leader accused the FM of wanting to “deny reality”, insisting there was a real-terms cut to council funding.

He added: “All of Scotland's 32 councils are united in their opposition to this government’s cuts.

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“Councillors of every political party, including her own, are angry and warning of the dire consequences. But Nicola Sturgeon is not listening.

“As usual, she is right and everyone else is wrong. Why can the First Minister see the damage hard decisions are making to our communities?”

Mr Sarwar accused Ms Sturgeon of being “out of touch with reality”.

He added: “Enough is enough – get off your backs and speak out against this, First Minister, because across the country we are facing a future where children's music lessons are cut, libraries are closed and the bins will only be collected once a month.

“And the blame for all of this lies with Nicola Sturgeon and her government because wherever you look, this government is losing its grip.

“People used to say the First Minister was competent now they're saying she's out of control, and that's just people and our own political party.

“After 15 years of this SNP Government, local government is in crisis, teachers on strike the NHS on its knees – so will she finally admit that this is an SNP budget for cuts for closures and for strikes.”

In response, the First Minister said that “all of us can accept that these are really difficult times for local councils”.

She insisted that any increased funding for local councils would result in cash being taken away from other areas such as the NHS or policing.

Ms Sturgeon accused the Labour leader of having “not brought forward a single proposal within a budget that is fully allocated for putting a single extra penny into local government budgets”.

She said: “All sound and fury and no substance is a good summary of Anas Sarwar.

“The £570m increase that I've spoken about that is actually a real terms increase of £160.6m.

“So if Anas Sarwar wants to be taken seriously, he really has to bring some substance to what is a very difficult situation for local councils across the country.”