THE SNP Government under-spent its budget by almost half a billion pounds last year, prompting criticism of it raising taxes at the same time.

Finance Secretary Derek Mackay told MSPs that the provisional outturn figures for 2018/19 showed overall spending of £32bn, against a budget of around £32.5bn.

The resulting “cash variance” was £449m, almost as much as the £453m for 2017/18.

Mr Mackay said a third of the money was the result of Barnett formula consequentials, which had arrived late in the financial year.

All the unspent money can be held over into the current financial year or diverted to the Scottish reserve, helping to meet a looming £1bn black hole over the next three years.

Tory MSP Murdo Fraser criticised the government for having such a large underspend, roughly 0.9 per cent of the budget, while hiking income tax.

Scottish Govt are always telling us they don’t have enough money & have to hike taxes. @DerekMackaySNP has just told @ScotParl that there is an underspend from last year of £449m - almost as much as his tax changes raised! — Murdo Fraser (@murdo_fraser) June 20, 2019



Mr Mackay said that, last-minute Barnett consequentials aside, the underspend was only 0.6 per cent of the budget.

He also said the Scottish reserve was now £135m.

Labour MSP James Kelly said the public would find it astonishing that the government was sitting on a £450m “slush fund” while public services were being cut.

Mr Mackay said Labour changed its fiscal demands “as often as it changes it socks”.

LibDem leader Willie Rennie said people would be especially frustrated that the Transport Department had the biggest underspend given the problems on ScotRail.

Green MSP Patrick Harvie said it was a concern that the Scottish reserve was not enough to cope with forecast reductions to the budget resulting from historic tax estimates.

The figures demonstrate a 0.9% cash underspend which will be used to support vital public services and increase reserves in order to respond to future pressures.



Read @DerekMackaySNP's @ScotParl statement here. 👇https://t.co/FjdYn4bzOw pic.twitter.com/BNOdpEtOUr — ScotGovEconomy (@scotgoveconomy) June 20, 2019

The Scottish Fiscal Commission recently warned inaccurate income tax forecasts used to set recent budgets would soon result in adverse “reconciliations” to future budgets.

The negative reconciliations are estimated at £229m in 2020/21, £608 in 2021/22 and £188m in 2022/23.

Mr Mackay added: “Despite the continued backdrop of UK austerity and EU Exit uncertainty, the 2018/19 provisional outturn demonstrates that once again the Scottish Government has prudently and competently managed Scotland’s finances, ensuring public services are delivered in a fiscally responsible manner.

"Under the current devolution settlement, the Scottish Parliament is not permitted to overspend its budget.

"These budget underspends, which represent a fraction of our overall budget, will be carried forward in full through the Scottish Reserve, with most of it supporting the 2019-20 Scottish Budget.

"They will also enable us to increase our reserves to ensure we can respond to future challenges.”

Tom Gordon: Ministers need to look their budget fears in the eye

Labour said the underspend was six times the £69m needed to mitigate the impact of the two-child benefit cap in Scotland.

Mr Kelly said: “It is disgraceful that Derek Mackay is sitting on a slush fund in St Andrew’s House whilst children are queuing with their parents at food banks across Scotland every day.

“Time after time he told the public he can’t afford to lift the two-child cap or end the rape clause and all the while the money to do so was lying in his government’s bank account.

“Our schools, our NHS and our councils are being starved of cash by the SNP.

“It’s time for Derek Mackay to listen to Scottish Labour and use this money to help the most vulnerable people in our society.”

Mr Harvie added: "The Scotland Reserve is the main mechanism to deal with year-to-year volatility in the Scottish public finances, but after the Government draws down money from the Reserve as it proposes, there won’t be enough to cover the predicted shortfall in the coming years.

"The Finance Secretary must explain how he plans to rebuild the reserve so that it can cover the estimated £1bn that is needed, and whether he plans to use tax or spending powers to do this.”