In addition, Donald Dewar said authorities would receive pound;75 million extra for pre-school education, pound;9 million more than planned, pound;7 million for the first year of the three-year early intervention programme and pound;1 million for alternatives to exclusion.

This will be ring-fenced, which means it cannot be spent on anything else and will be exempt from Government spending caps. Spending restrictions will also be relaxed so that their expenditure can be increased by 3.4 per cent, or pound;191 million, before it hits Government limits. This is pound;150 million more than the inherited plans.

There was a further easing of the cap last month. But the Convention of Scottish Local Authorities fears this is not enough to avoid council taxpayers paying more for fewer services and facing higher charges.

Problems have been exacerbated, Cosla says, by the fact that for the fifth year running councils have to bear the entire burden of pay rises. They will have to find another pound;30 million for teacher pay if increases are in line with the 2 per cent to 3 per cent rises of previous years. Authorities have had to absorb pound;110 million in salary awards over the past four years.

The Chancellor is also placing further strains on local authorities by insisting on sticking with the spending plans he inherited for two years, pending a “comprehensive spending review”.

Using 1995-96 as the price base, total Scottish Office expenditure in the four years from April 1996 to March 2000 is set to fall from pound;14.1 billion to pound;13.3 billion, a reduction of 6 per cent, totalling pound;844 million.

Cosla calculates that local authorities’ share of this will be a pound;498 million decrease, or 8.5 per cent.