Exclusive:John Swinney issues clear message over 'high' proposed 10% Scottish council tax hikes

The First Minister told The Scotsman that council leaders have privately admitted to him that their funding settlement from the Scottish Government was better than expected.

He said: "I understand the need for there to be increases in council tax, but I think the lower, the better.”

Elsewhere, Mr Swinney also told The Steamie, The Scotsman's politics podcast, the SNP Government's flagship Scottish Child Payment has reached its limit.

"If you put that too high, you create a disincentive to enter the labour market," he said. The payment currently sits at £26.70 a week.

The Scottish Government announced funding of £15 billion for local authorities in its draft budget in December. Cosla, the council umbrella body, has described this as a “step in the right direction”, but insisted “significant pressures” remain.

The Accounts Commission recently warned councils in Scotland “face a challenging future, with significant financial risks and uncertainties”.

Ahead of the Budget, a survey from the Local Government Information Unit suggested around one in five Scottish councils could increase council tax by 10 per cent or more in April.

Mr Swinney's own council area, Perth and Kinross, is considering a rise of 10 per cent. But the First Minister said increases of this size are not necessary.

He told The Scotsman: "I think if you had a quiet conversation with council leaders where they were not being bound by certain things, they would say to you, 'We got a better settlement than we thought we were going to get'.

"I think that's the case. That's what they say to me as well in private moments - possibly, they might think these were reckless conversations to have with me, but they've had them.

“And I think as a consequence, that means council tax increases don't need to be as high."

Asked if 10 per cent is too high, he said: "I think it is, yes." He added: "I don't think that's necessary, to be honest."

Mr Swinney said: "I've seen some pretty hostile reactions from local government to government budgets over my time, and the local government reaction to the budget this time round has been pretty welcoming, on two levels.

"First of all, local government - and I appreciate this - have acknowledged that the commitments I gave Cosla that there would be substantive engagement about the budget process long before the budget was determined have been fulfilled.

"From my personal point of view, I gave them a commitment that you'll get good engagement with the government, and they've said, well, we got it. So that matters to me that they feel that, because I want to have a good relationship with local government.

"And secondly, substantively, we got asked to deliver a real terms increase in local government core funding, and we delivered that."

Earlier the week, Cosla said councils face “a very difficult balancing act”. It said additional funding “simply does not cover” all of the pressures facing local authorities, “meaning more cuts to services will be required to balance budgets”.

The Scottish Child Payment will only be hiked by 45p a week next year and will now only rise by the rate of inflation - with the First Minister stressing any additional funding that could be used to further hike the benefit could be better spent on other measures to tackle child poverty.

Asked if above-inflation rises to the Scottish Child Payment have been maxed out, Mr Swinney said: “I take that view.”

He said: “If you go back to the start of the discussions about the child payment, the Scottish Child Payment started off as a campaign called ‘give me five’ and it was about a £5 weekly payment.

“If you put that too high, you create a disincentive to enter the labour market.”

Mr Swinney added: “I believe, fundamentally, that families will be in a better position if parents can get into well-paid, sustainable, good quality employment.

“You’ve got to maintain a very careful balance about the level that you let the Scottish Child Payment to reach or you walk into that disincentive. I don’t think that’s desirable.”