COUNCILS were given GBP57m in extra funding yesterday in a last-minute attempt to relieve pressure on tax bills, with most local authorities today facing decisions on inf lation-busting increases.

Tom McCabe, finance minister, allocated the money as the result of an inflation-accounting mistake, but it fell short of the GBP85m experts said was necessary. Continuing an increasingly bitter war of words, Mr McCabe told MSPs that council "scaremongering" was unjustified, and that seven councils are thought likely to stick to the 2.5per cent ceiling on tax increases that ministers want.

Others are expected to break that guideline, with Falkirk yesterday becoming the second council to put its tax level up by 4.6per cent, an extra GBP57 on the average bill. Twenty-nine councils will today decide tax levels, along with packages of cutbacks. If councils do not fall into line, they could be threatened with mergers.

Mr McCabe's plan to rethink the way they deliver services - doing more together and with health boards and enterprise companies - is understood to be at its third internal draft.

One suggestion is to give a new look to the council map of Scotland by cutting the present 32 authorities to 14, with 11 on the mainland and the three island councils retained.