Deputy First Minister Shona Robison has insisted that local authorities have been treated “reasonably fairly” in her budget as she warned hiking council tax and keeping funding earmarked to freeze the charge “will not wash” with the public.

Humza Yousaf’s government is set for showdown talks with local authority leader tomorrow over a controversial pledge by SNP ministers to freeze council tax.

Council had until today, when the budget reached stage two of its Holyrood process, to indicate whether they will accept the council tax freeze and receive their share of the funding to offset the policy.

Three councils have already set their budgets and accepted the freeze with two others have publicly stated they will do so.

The policy was announced at last year’s SNP conference without engagement with the umbrella group for Scottish councils, Cosla, and their partners in government, the Scottish Greens.

In her draft budget, Ms Robison earmarked £147 million to offset councils hiking council tax by 5% and agreeing to the freeze.

Read more: Council chiefs to urge SNP to allow capped rise to council tax

But some local authorities were planning to hike council tax by more than 5% in the next financial year to prevent cuts to public services amid budget constraints.

The Herald revealed that Cosla was set to appeal for councils to keep their share of the £144 million but also be able to hike council tax by a capped amount.

This position was formally adopted by Cosla earlier this month and council chiefs will hold key talks with MS Robison tomorrow over the stand-off.

Ms Robison has insisted that keeping a share of the freeze funding and still hiking council tax would not be acceptable.

The Deputy First Minister, who is also Finance Secretary, stressed ministers were providing councils with £147 million for freezing council tax bills in 2024-25 in what is a “difficult” budget “for the whole public sector”.

Read more: Analysis: Scottish council funding as usual won't cut it

Appearing in front of Holyrood’s Finance Committee, Ms Robison rejected the idea that the cash could still be handed to local authorities refusing to freeze council tax.

She said: “That money is for the freeze and I don’t think it would be acceptable to council tax payers for us to say ‘you can have the money and you can put council tax up as well’.

“I don’t think that is going to wash with council tax payers.”

Speaking as the Scottish Government’s budget completed its second stage of scrutiny at Holyrood, the Finance Secretary said the money for the freeze “is on the table and it is for local councils to decide”.

She added: “We have already seen a number of councils, of all political colours, make the decision to freeze the council tax.

“In difficult financial times, we have, I think, been fair to local government, but it is a tough budget and it is tough for the whole of the public sector.”

With some £14 billion going to councils, she said they would receive 32% of the Scottish Government’s overall budget in 2024-25 – up from 31% in this current year.

Read more: Yousaf and Robison hold crunch council tax freeze talks with Cosla

The Deputy First Minister told MSPs: “In a budget where there is less money, the size of the cake is reduced, local government literally has a bigger slice of it.

“That tells me that within a difficult financial environment and settlement that local government has been treated reasonably fairly.”

With pressure on public finances, Ms Robison went on to urge UK Chancellor Jeremy Hunt not to cut taxes in his Budget on March 6 – and instead to invest any available funds in public services.

With a general election looming, there has been speculation the Chancellor could seek to woo voters with tax cuts.

Mr Hunt himself said he wants to “lighten the tax burden”, although he said earlier this month that he does not believe the upcoming spring Budget will have “the same scope for cutting taxes” as the autumn statement.

Ms Robison urged him to resist the temptation to reduce taxes, saying she was “clear that the UK Government needs to use any headroom it has to invest in services”.

The Deputy First Minister added: “I really hope he prioritises investment in public services, rather than tax cuts, because that would enable us to make investments in our enterprise agencies, or universities or colleges.”

A Scottish Government spokesperson said: “The Deputy First Minister requested confirmation of councils’ intentions to inform Stage 2 of the Scottish budget, which took place today.

“Ministers have always recognised that at this stage, councils may still be finalising their council tax intentions and that they would be subject to confirmation at council budget meetings in February and March. As such, it is for councils to state their plans for their upcoming budgets.

”We note that Glasgow City Council, North Lanarkshire Council and East Lothian Council have already set out in their budgets that they will implement a council tax freeze, which has been fully funded by the Scottish Government. Dundee City Council and Edinburgh City Council administrations have also publicly stated their intention to take forward the freeze.”

Cosla declined to comment before the meeting.