Cosla has warned against setting unrealistic tax rise targets

Finance Minister Tom McCabe made the call in parliament as he revealed the central government grant would increase by nearly 4% to �8.3bn.

He said the public could reasonably expect councils to restrict council tax rises to 2.5% despite concerns from opposition parties.

But Cosla said few councils would be able to keep rises that low.

Mr McCabe told Holyrood that councils would also get �1.1bn of grants for specific Scottish Executive-led initiatives.

He dismissed as "scaremongering" claims by councillors and opposition MSPs that local authorities faced cutting services to avoid big council tax hikes.

Councils will have over �450m extra compared with the figures parliament approved this time last year Tom McCabe Finance Minister

"Amidst all the rhetoric we could be forgiven for thinking that these significant additional sums may have been overlooked," said Mr McCabe.

"Taken together with the like-for-like increase for 2006-07, councils will have over �450m extra compared with the figures parliament approved this time last year.

"This takes our spending to a record high and confirms our commitment to improve public services for people living and working in Scotland."

North Ayrshire Council, which decided its council tax rate ahead of other local authorities on Tuesday, announced a 4.65% increase, resulting in a �50 rise in Band D bills from April.

Cosla unease

Mr McCabe said: "When we look below the headlines, Cosla's own figures indicate that several councils are planning increases at or not far above 2.5%.

"Councils need to consider carefully their responsibilities, it will be for them to justify their decisions to their own electorates."

Cosla president Pat Watters said constantly referring to a 2.5% rise would not help deliver it.

Councils will announce their tax rises on Thursday

He said councils would be able to keep tax rises low because of their effective management, but very few would be able to limit the rise to 2.5%.

There would be no way to keep council tax rises to the levels everyone would want without significant cuts in services to local communities, Mr Watters went on.

He added: "Local government appears to be the only ones trying to protect the council taxpayer and I would stress once more that constantly saying 2.5% is so much easier than doing anything to help achieve it."

Scottish National Party finance spokesman John Swinney accused the executive of mishandling the financial settlement of local authorities.

'Hard choice'

"Councils across Scotland are now facing a hard choice - council tax rises well above the rate of inflation, or swingeing cuts to vital frontline local services," he said.

Tory local government spokesman David Davidson said the public were likely to be between a rock and a hard place with either cuts in public services or increases in council tax.

Liberal Democrat MSP Andrew Arbuckle said many councillors were more concerned about local authorities' financial status in 2007-08.

Mark Ballard, Green MSP for Lothians region, said the executive's insistence on protection for all services and on tax rises of no more than 2.5% was an "impossible equation".