More cuts may have to be made in Scotland, warns John Swinney

More cuts may have to be made in Scotland due to the "colossal" pressure on public finances, the Deputy First Minister has said.

John Swinney said he feared the UK Government's decisions would involve "cuts to public expenditure" that would have an impact north of the border.

He repeated his warning that public finances are now under more strain than during the 2008 crash and the years of austerity that followed.

Mr Swinney, who is the acting Finance Secretary, said matters had been made worse by the fallout from the UK mini-Budget.

Deputy First Minister John Swinney

Giving evidence to Holyrood’s finance and public administration committee, he said: "The pressures are absolutely colossal, hence why I've had to come to parliament to announce reductions in public expenditure already this year and I may have to do more of that in the period that remains."

It comes after the UK Government U-turned on plans to abolish the 45p rate of income tax for high earners.

Tax changes down south had meant more than £600 million of extra spending would come to Scotland, where income tax rates and bands are devolved.

However, Mr Swinney said this had now fallen by 18 per cent, leaving a total figure of £540 million.

Last month, he announced more than £500 million of spending cuts in Scotland and warned these were “just the beginning of the hard choices” that will need to be made.

Speaking at the Holyrood committee, he said: "Obviously if there is a change to the content of the UK's spending plans for the next financial year, which I fear is the case because of the unfunded tax cuts and the market turmoil that is being experienced, then that potentially could have an effect."

Mr Swinney said this could have different impacts in different areas, adding: "A significant reduction in social security expenditure, for example, will not necessarily have a direct impact on the Scottish Government's Budget.

"It certainly would have an indirect effect on the challenges that we face.

"But reductions in English departmental expenditure – health, education, local government, various other expenditures of that type – would have a very direct impact on public expenditure in Scotland."

He said Scottish ministers are "obliged to balance the budget", adding: "So we would have to take decisions based on the appropriate balance between taxation and public expenditure, in the light of that data that becomes apparent and also in the light of the block grant adjustments that follow from that."

Mr Swinney said the public sector workforce will "undoubtedly" have to be reduced, but how this is done is "crucial".

He said he wanted to do this "in a spirit of partnership" with the workforce and highlighted recruitment freezes as an example of a "managed and careful" approach.