MSPs have rejected calls by the Conservatives for the Scottish Government to syphon off a set proportion of their annual budget for local councils.

The appeal came after Cosla, the umbrella organisation for Scottish councils, warned that authorities are facing a real-terms cut in the next financial year – as well as losing control over a larger proportion of their finances which are being allocated to Scottish Government priorities.

The Scottish Conservative local government spokesperson, Miles Briggs, called for a percentage of Holyrood’s annual budget to be allocated to local councils in order to halt “15 years of this SNP Government underfunding local government in Scotland”.

Mr Briggs added: “There’s increasing concern over the long-term financial sustainability of local government finances and the problems facing our Scottish councils that have been allowed to build up under this government with no reform or leadership shown by SNP minister.

“Put simply, council leaders across Scotland have nothing left they can cut to save money or balance their books.”

Mr Briggs added that his party “want to see a fair deal for local authorities” and an adequate settlement for the Scottish Government from Westminster reflected in their offer to councils.

He called for “a new fair funding formula to make sure that councils receive their fair share of funding”.

Mr Briggs added: “We need to see a sea change and we need to see a new partnership built between the Scottish Government and local authorities.”

Scottish Labour’s Neil Bibby warned that it was “simply unsustainable for the SNP to continue cutting council budgets to the bone”, and hit out at the “pernicious ring-fencing” and cuts.

He said: “Today, the president of Cosla said that tax rises are inevitable, that cuts are inevitable unless the Government delivers an improved financial settlement.

“These are not choices, these are SNP cuts forced on local government as part of a sustained campaign that’s been going on for a decade now and has cost services £937 million since 2013.”

Labour’s finance spokesperson, Daniel Johnson, warned MSPs over the real-life consequences for communities after persistent cuts to local government budgets.

He said: “Over 10 years, local government has seen almost £1 billion cut in real terms from their ability to spend.

“Ultimately, that impacts roads, schools, libraries and playgrounds – those very services are the fabric of our communities, the bedrock that so many people rely on.”

In response, SNP Public Finance Minister Tom Arthur rejected the call, warning that a percentage being allocated to local government could impact NHS budgets and stressed his government remains keen to redraw the financial relationship between Holyrood and local councils.

He said: “We have reaffirmed our commitment to developing a local government fiscal framework in partnership with Cosla.

“It must be workable. Crucially, it cannot put funding from the NHS at risk.”

Mr Arthur said that it was all very well to demand more money for councils, but pointed the finger at opposition parties for failing to say where the cash should come from, given that next year’s budget has been fully allocated.

He said: “I recognise members want to see more money for local government. This tends to be an annual debate and year after year after year, what we do not have is where that resources should come from.

“I’m asking in all sincerity, if members want to see additional resource for local government, then from where should it come?”

MSPs voted to reject the Conservatives motion, and instead backed a Scottish Government motion which claims that “the total local government settlement has increased by £588.2 million, or 5.1% in real terms” and acknowledges a “commitment to developing a fiscal framework for local government and delivering a citizens’ assembly on sources of local government funding”.