Ray Perman, a fellow at the Royal Society and a financial expert, told Holyrood’s finance committee that key UK Government funds had soured intergovernmental relations ahead of fresh negotiations around Scotland’s financial settlement with Westminster.
It comes as ministers are set to restart negotiations around how the UK Government calculates the funding provided to the Scottish Government, initially agreed in 2016.
However, Mr Perman warned that discussions will start on “not a good basis” due to decisions made by Boris Johnson’s administrations to bypass devolved governments and spending directly in Scotland.
Two key pillars of the Conservative’s charm offensive to Scottish voters include the Shared Prosperity Fund – which will replace EU funds post-Brexit – and the Levelling Up Fund were referenced as contribution to the deterioration of relationships.
Mr Perman said: “We feel that there are a number of things which could be done which would improve the position for Scotland, not necessarily at the expense of any other part of the UK, but that the relationship between the devolved governments generally, not just in Scotland, and the UK government has deteriorated.
"It does seem to us that there is a conscious political decision to undermine the devolution settlement by making direct interventions particularly in Scotland but I think in the other devolved nations too.
"We list some of them in that and we have seen another one since then with the NIC [National Insurance Contributions] increase.
"That’s not a good basis on which to go into negotiations which will depend on give and take on both sides and good will on both sides.
"It is incumbent on the UK Government to do something about that but also Scotland could help by raising those points in a constructive way and seeing if there is a way in which we can get back to a more stable footing.”
Following a line of questioning from SNP MSP, John Mason, who asked whether simplifying the fiscal framework would mean it was less fair, Mr Perman added that it is the political relationships and decisions that determine the effectiveness of the financial settlement.
He said: “In the last year a number of things have been done really regardless of the fiscal framework.
"Extra funds have been pumped into the Scottish economy to deal with the pandemic and they have sort of been fudged into the fiscal framework
“It really is the political relationship that is important, to mend the political relationship between the Scottish Government and the UK Government or between the devolved adminstrations and the UK Government, because at the end it is the politics that matter rather than the various clauses and calculations in the fiscal framework.”
David Eiser, a senior fellow in economics at the Fraser of Allander institute agreed.
He told MSPs: “The question of intergovernmental relations is really important and there’s no doubt that those relations seem to have deteriorated recently and that is going to pose and is posing a number of challenges when it comes to the renegotiation of the fiscal framework, but also the arrangements for the replacement of the EU legacy funds.”