UK ministers have pledged to devolve more than 100 powers back to Holyrood - ranging from fishing to agriculture - once the country leaves the European Union, which Theresa May’s team believe would put an end to talk of Brexit being a “Westminster power grab”.
But Downing Street was also adamant it would need to retain a form of veto over how these new powers were used until a common framework was adopted, meaning the UK’s internal market could not be disrupted.
Scottish ministers fear this means they could be tied into deals negotiated by Westminster with no input from Holyrood, The Times reported.
A Scottish Government insider told the newspaper: “This goes against the spirit of devolution: you can’t really devolve something if you are not really devovling it.”
Ministers from both the UK and Scottish Governments are due to formally meet on Thursday to discuss Brexit, but Downing Street hopes of a breakthrough on powers appear to be dashed.
Both sides have until the end of March to reach an agreement before the bill is due to pass through the House of Lords, or it will clear Westminster without Scottish Government backing.
Downing Street, still hopeful of a deal, wishes to avoid that scenario to avoid being accused of ignorning the Scottish will.