David Mundell suggested the finance secretary was “chancing his arm” to ask English taxpayers to subsidise Scotland once income tax is devolved to Scotland.
Mr Mundell said Mr Swinney should drop his demand urging the Scottish Government to bear the “molehill” of risk associated with transferring a raft of new of tax powers to the Scottish Parliament.
As talks between the UK and Scottish governments grow increasingly fractious, Mr Mundell objected to Mr Swinney’s proposal to protect Scotland’s budget in the event of Scottish population growth falling behind the rest of the UK.
Mr Mundell said he was still confident that a deal would be done – possibly as soon as next week. But he emphasised that it had to be fair to the rest of the UK as well as Scotland.
The Scottish Secretary announced that the terms of the fiscal framework would be reviewed every few years to ensure it was fair. He warned the Scottish people would not forgive either government if they walked away from the process.
“We would be setting aside a mountain of powers because of the Scottish Government’s aversion to a what is really a molehill of risks,” he said.
On Mr Swinney’s call for Scotland’s budget to be protected, Mr Mundell said: “If there is tax growth in England then that money remains in England.
“It’s simply ludicrous, I think, to suggest that tax growth from England should somehow have to come to Scotland, whereas our position in Scotland is that if we have tax growth we keep it.
“I just think that’s an untenable position, which is not going to be sustainable in reaching an agreement.”
Mr Mundell added: “I don’t blame John Swinney for chancing his arm that we keep the Barnett Formula, we don’t bear any risk and by the way if we get any extra money we will keep it. And if there is any extra money in England we will have a bit of that too. But I would describe that as having your cake and eating it and then having a bit of everybody else’s cake too.”
Last night Mr Swinney said: “A substantial cut in Scotland’s budget – potentially amounting to billions of pounds in the years ahead – is no ‘molehill’. We will continue to work on achieving a fair deal – but one that delivers on the Smith Commission principle of ‘no detriment’.”