John Swinney is to use face-to-face talks with Sir Keir Starmer to try and persuade him to increase public spending after an audit warned the SNP Government is running out of money.

The First Minister is to meet Sir Keir privately in Edinburgh on Friday ahead of the Labour Government’s inaugural meeting of its Council of Nations and Regions.

Mr Swinney said he wanted to persuade the Prime Minister of “the transformative potential of public sector investment to stop the austerity agenda”.

Referring to higher spending, he argued that “we must acknowledge the barriers that prevent the Scottish Government advancing our progressive agenda” and said his government had shown that “public sector investment is a force for good”.

But his plea came after the Auditor General for Scotland warned that the SNP Government’s own projections “suggest it cannot pay for public services in their current form”, with a budget shortfall of more than £1 billion projected.

In a highly critical assessment of the Scottish Government’s 2023/24 accounts, Stephen Boyle attacked the SNP’s failure to reform the public sector, including “looking at the size and the structure” of the workforce.

Rather than addressing the public sector’s “unsustainable financial position”, he said SNP ministers were instead relying on one-off savings to meet recurring costs. Mr Boyle said this “doesn’t tackle the issue, it exacerbates it”.

Labour said the report laid bare “the damage being done by the SNP’s chaotic and dysfunctional handling of public money”, and its “sticking plaster approach to government”.

Sir Keir created the Council of Nations and Regions to try and “rewire” how the UK Government operates. The Welsh and Northern Irish first ministers will also attend, along with England’s regional mayors.

The Prime Minister plans to use the inaugural meeting to highlight thousands of green jobs being created across the UK in industries such as solar power and offshore wind.

He said: “Today I’m convening the first-ever Council of Nations and Regions, because it is when we work together in the spirit of genuine partnership, that we can deliver the real change people want to see and improve opportunities for all.”

‘Big issues facing Scotland’

Calling for higher spending, Mr Swinney said: “We know the acute pressures facing public finances and the need to grow the economy.

“This meeting should be an opportunity to speak frankly about the big issues facing Scotland – and the UK – and to discuss the action required to deliver meaningful change.”

The Auditor General’s report found the Scottish Government spent £277 million less than its £54 billion budget last year. The NHS, social care and benefits together accounted for 46 per cent of its spending.

But Mr Boyle concluded there had not been enough progress made in reforming Scotland’s public services over the past year, and changes were now urgent.

His audit of the SNP Government accounts concluded: “Since devolution, the Scottish Budget and workforce numbers have grown significantly.

“The Scottish Government’s projections suggest that it cannot afford to pay for public services in their current form. Reform is urgently needed to address budget shortfalls of more than £1 billion over the coming years.”

It added: “Difficult decisions need to be made to secure a sustainable future for public services in Scotland.”

Michael Marra, Scottish Labour’s finance spokesman, said: “The SNP’s financial and economic illiteracy has left public finances in chaos, public services at breaking point, and Scots paying more in tax.”

Willie Rennie, a Liberal Democrat MSP, said: “When it comes to the public finances, it often feels like SNP ministers are playing a constant game of Whac-A-Mole. There’s no strategy and no plan.”