The SNP-led Government wrote to Chancellor Nadhim Zahawi warning that they would be forced to impose deep cuts” to public services unless new money was made available. Deputy first minister John Swinney warned that higher-than-expected public sector pay rises, caused by inflation, was behind the shortfall.
He claimed last year’s UK Spending Review did not take into account the pay increases proposed by independent pay review bodies.
Inflation is currently raging at more than 10 percent, leading to higher than anticipated rises.
In his letter, Mr Swinney said: “Given our fixed budgets, our restricted borrowing powers and the inability to change tax policy in year, the lack of additional funding for public sector pay deals via the Barnett Formula means the Scottish Government could only replicate these pay deals for public workers in Scotland with deep cuts to public services.”
But the Scottish Tories have attacked the SNP for trying to “shift the blame elsewhere” for mistakes made by the Scottish government.
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Liz Smith, the Scottish Tory spokesman for finance, said: “The real story is that the nationalists have created a £3.5billion black hole in their finances according to the Institute for Fiscal Studies (IFS), and have already cut front-line services to the bone.
“They’ve got some nerve trying to shift the blame elsewhere – council workers are about to strike because the SNP left local authorities so cash-strapped they can’t improve pay.
“That’s despite massive additional support from the UK Government, including the largest block grant from Westminster in the history of devolution.”
In May the IFS had warned that “a series of expensive spending commitments” by the SNP-led government risked a huge shortfall in finances.
Scottish ministers have vowed to ramp up welfare spending to give higher benefit payments than the rest of the UK.
It is thought an extra £1.3billion will have to be spent on benefits in Scotland by 2026/27.
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At the same time, the SNP has continued to use government resources to plough ahead with its IndyRef2 preparations.
It is even using government lawyers to make an expensive court case to determine if Holyrood can hold a referendum on breaking up the UK without permission from Westminster.
In his begging letter, Mr Swinney told Mr Zahawi: “Further to the joint letter from devolved administration finance ministers to you on July 15, and in light of the UK Government’s subsequent announcements regarding public sector pay, I am concerned that no associated funding is being provided to meet these additional costs.
“Last year’s UK Spending Review, which as you know determines the majority of the Scottish Budget, did not take account of the levels of pay uplift now proposed or indeed the wider effects of inflation.
“The associated reduction in spending power across public sector budgets is deeply worrying for our public services and our capacity to respond to the cost-of-living crisis, which will undoubtedly bring renewed challenges through the coming autumn and winter period.
“Given our fixed budgets, our restricted borrowing powers and the inability to change tax policy in year, the lack of additional funding for public sector pay deals via the Barnett Formula means the Scottish Government could only replicate these pay deals for public workers in Scotland with deep cuts to public services.
“I would urge you to consider appropriate funding for public sector pay, and would welcome early discussions with you on this matter.”
A UK Government spokesperson said: “We have provided the Scottish Government with a record £41billion per year for the next three years, the highest spending review settlement since devolution.
“As a result, the Scottish Government is receiving around £126 per person for every £100 per person of equivalent UK Government spending in England over the next three years.
“We’re also helping to tackle the rising cost of living, protecting eight million of the most vulnerable families with direct payments of £1,200 this year, and providing additional payments to pensioners and disabled people.”