Scottish ministers have raided a £460m green energy fund to help pay for higher than inflation pay deals that the government did not budget for.
Shona Robison, the Scottish finance secretary, said she needed to use the fund while also cutting non-essential spending by £500m to fill a £1bn hole in this year’s government finances.
The cuts include cancelling a flat-rate rail fares scheme, dropping free buses for asylum seekers, allowing councils to divert money from flood schemes and nature projects, cutting green travel projects and banning non-essential recruitment.
Scottish government announces spending cuts worth £500m – as it happened
She confirmed that £800m of that shortfall arose from her government’s public sector pay deals this year, which had helped avert a number of strikes, including the doctors’ strikes that beset England’s hospitals.
Leading thinktanks including the Institute for Fiscal Studies and the Scottish Fiscal Commission have warned none of that money was budgeted for by ministers, who failed to set out a clear public pay policy until after the annual budgets were set.
Shortly before Robison addressed the Scottish parliament, the public sector union Unison announced that its members had rejected the latest pay offer. It is now considering a new campaign of industrial action on the part of refuse workers across Scotland.
Under questioning from opposition MSPs, Robison confirmed she was prepared to use all the money earmarked this year for Scottish net zero and climate projects raised in the ScotWind offshore licensing round.
She said she hoped some of the other emergency cuts could reduce her reliance on ScotWind income, but warned the belt-tightening would continue unless the next UK government budget in October released more money for Scotland.
“If the Scottish government does not act, spending will continue to outstrip available funding,” she said. “This is not sustainable and tough decisions will be required. Annual savings alone will not address this.”
Her announcement was attacked by Holyrood’s opposition parties, who unanimously criticised the government’s failure to plan adequately. Robison had previously used ScotWind funds to plug a hole in her finances, using £350m for general spending in January.
Michael Marra, Scottish Labour’s finance spokesperson, said Robison was making “threadbare attempts” to blame the UK government for these cuts. “The culture of always blaming someone else comes with a cost, and it is meted out in jobs and service cuts,” he said. “Scots are left paying more and getting less.”
Instead of rigorous financial management, her raids on ScotWind money “almost guarantees that this cycle of short term sticking-plaster politics will run and run”, he added.
The Scottish Greens, who were in government with the SNP until March this year, were furious Robison had cut spending on climate action rather than reducing the £700m in tax breaks for businesses and grouse moors.
“The SNP has chosen to slash spending on climate action, hitting budgets for nature restoration, walking, wheeling and cycling, bringing back peak rail fares and raiding Scotland offshore wind income,” said Ross Greer, a Green MSP.
Robison defended her government’s decisions, saying Scotland’s higher income taxes for the better off had raised £1.5bn more this year than it would have using the UK’s income tax rates. Those helped fund £6.1bn in social benefits such as the Scottish child payment, which had kept 100,000 children out of poverty.
That failed to impress the Scottish Trades Union Congress (STUC). Roz Foyer, STUC’s general secretary, said the Scottish government could have used its powers to increase taxation on the rich.
“We are in no doubt that brutal Tory austerity has had an undeniable impact on Scotland’s finances,” Foyer said. “But the Scottish government must take responsibility for their own cuts.”
