Finance Secretary John Swinney says there are two key issues that have affected the level of non-domestic rates.

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Mr Swinney says inflation has been significantly lower than the OBR estimated and the level of buoyancy has not been as high as forecast.

This has led to a cumulative impact, he says.

Mr Swinney says in his final offer letter on the 27 January to all council leaders, he made it clear to that they must sign up to 

• integration of health and social care
• the council tax freeze 
• maintaining the ratio of teachers to pupils in schools

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He says if an authority says they are going to sign up to all three elements but then increase council tax this will be seen as bad faith.

Mr Swinney says he will withdraw the funding in relation to the whole £408m available for the three elements.

So if a council fails on one of the commitments, it will lose funding for all three. 

Mr Swinney says the local government settlement base has been getting stronger and stronger over the years.

The finance secretary when the injection of £250m into joint boards for health and social care integration is factored in, local government funding has gone down by 1%.

Some of the language around the budget settlement has been "absolutely inappropriate".

Mr Swinney says the reduction in local government funding has been significantly lower than in the rest of the UK.

Labour MSP Jayne Baxter asks about the £250m transfer from the NHS.

Mr Swinney says local authorities can offset increases in provisions of social care.

He says £125m can be used for this and within that there will be resources to pay the living wage to care workers. 

Finance Secretary John Swinney says we need to find new and different ways to meet the needs of individuals.

Mr Swinney says he would urge local authorities to look at new innovative ways to achieve this.

The Finance Secretary says local authorities still work alone instead of collaboratively in terms of services and they should look at doing things differently. 

SNP MSP George Adam says social care and health integration should not be a surprise to local authorities.

Mr Swinney says the debate has been going on since the founding days of the parliament and he is pleased the government has legislated for integration from the 1st of April.

He says members of the public want to see individuals getting the support they require and integration will allow the needs of individuals to be addressed more adequately.

At the weekend, Nicola Sturgeon defended the funding deal for Scottish councils - and called on them to implement the Living Wage for care workers. 

The first minister urged councils to accept the funding package on offer and work together in tackling low pay. 

Many councils have argued that the deal and council tax freeze will force them into making "draconian cuts". 

Ms Sturgeon made her plea as she addressed the SNP's first disabled members conference in Glasgow. Scotland's councils have until 9 February to respond to the Scottish government's funding package.

The finance secretary says there is £350m reduction in local authority grant and aid in his budget

As a proportion of total expenditure of local authorities that equates to a 2% reduction, he says.

This becomes less than 1% when the funding for social care and health integration is factored in.

Mr Swinney says some of the talk about the impact of the settlement has been "over the top".

He says the local government settlement is "credible".

The group representing many of Scotland's councils has urged them to reject the Scottish government's funding settlement offer. 

Council leaders on the Convention of Scottish Local Authorities voted by 21 to 7 to reject the "unacceptable" deal. 

The motion said the Scottish government's approach was "wholly misguided" and "threatens grievous injury" to communities and citizens. 

Finance secretary John Swinney called the offer "a deal worth taking". 

Councils have until 9 February to respond to the settlement offer. 

All councils in the Cosla grouping which are not run by the SNP united against the deal, with some looking at the possibility of a legal challenge. 

Scotland's four other councils which are not part of Cosla also met, and are exploring whether the terms of the deal being offered are legal. 

Committee convener Kevin Stewart says the draft budget describes the local government settlement as "strong but challenging", with council leaders using stronger language.

Mr Swinney says there are mitigation measures to make up for the cut to local government funding this year.

The finance secretary says local government funding has been stronger than south of the border.

The Scottish government is taking fresh steps to try to stop local authorities breaking the council tax freeze. 

The government has given councils details of the sanctions they would face if they broke ranks and raised the tax for the first time since 2007. 

Local government organisation Cosla said councils would now face "draconian" measures. 

It said it was now hard to see how Scotland's 32 local authorities could afford to put up council tax bills. 

Further details of the offer being made to councils are still emerging But BBC Scotland understands it includes a bigger than usual stick to stop any council putting up the council tax. 

BBC Scotland believes that any council which rejected the funding deal would lose money on three counts:

• their share of money for freezing the council tax 
• their share of £250m towards the integration of health and social care 
• their share of money to maintain the ratio of teachers to pupils in schools 

The three together are worth more than £408m to Scotland's councils. 

The finance secretary says the UK government's austerity programme has reduced the Scottish government's budget.

Mr Swinney says local government funding has been protected in Scotland in recent years. in stark contrast to in England.

He says education remains a priority for the government and teacher pupils ratio must be maintained.

The finance secretary details the requirements for health and social care integration.

Last week Finance Secretary John Swinney held talks with local government representatives in a bid to resolve a row over council budgets. 

Mr Swinney said he wanted to protect the council tax freeze, invest in social care and maintain the pupil-teacher ratio in Scotland's schools. 

Scotland's 32 councils now have until 2 February to respond to the plan. 

Many councillors had voiced concerns about this year's funding offer from the Scottish government. 

The original deadline for councils to accept the deal had to be delayed.  

Finance Secretary John Swinney has defended his budget decision to cut local government revenues by 3.5% for 2016/17. 

He told BBC Radio Scotland's Good Morning Scotland programme that in England councils had faced reductions of about 27%. 

But local government body Cosla said the cuts were "totally unacceptable". 

Mr Swinney's budget pledged no change to income tax and a continued council tax freeze. 

Opposition parties have claimed cuts to council spending could derail the Scottish government's flagship plans to close the country's education attainment gap. 

But Mr Swinney said the Scottish government had been fair to Scotland's 32 councils over many years. 

The Local Government and Regeneration Committee, external  will now ttake evidence on the draft budget from Finance Secretary John Swinney. 

The finance secretary says these regulations have been asked for by local government and will be welcomed by local government. 

The committee recommends the approval of the Local Authority (Capital Finance and Accounting) (Scotland) Regulations 2016 draft, external.

Mr Swinney says in 2003 the Local Government (Scotland) Act laid out the requirement for councils to keep under review the maximum amount of capital borrowing.

Local authorities sought greater autonomy over borrowing in 2014 and these regulations address that.

Finance Secretary John Swinney makes an opening statement on the Local Authority (Capital Finance and Accounting) (Scotland) Regulations 2016 draft, external.

The Local Government and Regeneration Committee , externalwill shortly begin taking evidence on the draft budget from Finance Secretary John Swinney. 

First though, Mr Swinney will begin by giving evidence on the Local Authority (Capital Finance and Accounting) (Scotland) Regulations 2016 draft, external.

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These regulations make provision with respect to the powers of local authorities to borrow money, to incur debt through borrowing by way of credit arrangements and to maintain loans funds. 

The minister will be joined by Hazel Black and Colin Brown from the Scottish Government.