SCOTTISH Finance Secretary Derek Mackay has hit out at the UK Government after a then Treasury minister was "caught red-handed" lying in an attack on the SNP.

Brexit Trade Minister Liz Truss has been slapped down by Westminster's own statistics watchdog over “incorrect” claims about the UK Government’s generosity to Scotland made last month when she was Chief Secretary to the Treasury.

Mackay said the slapdown showed the Tories are so desperate to talk Scotland down that they "can't be trusted to be honest with people".

Last month, writing in the Daily Mail, Truss said the UK Treasury were “cushioning the blow” of lower than expected growth in Scotland.

Hitting out at the SNP government, Truss wrote: “Our mutually agreed fiscal framework is designed to benefit the Scottish Government if growth in Scotland is faster than the rest of the UK.

“Thankfully, it also cushions the blow when growth is down in Scotland. So I have confirmed that the Treasury will give £737m additional cash through the block grant to the Scottish Government.”

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However, the £737m was not additional cash because of poor growth, but rather money already deducted from Scotland’s block grant in 2017-18 due to an overestimate of how much money the government in Edinburgh would take through new devolved income taxes, and, in part down to weaker income tax receipts in the rest of the UK.

Truss’s comments prompted a complaint from Mackay to the UK Statistics Authority.

On Tuesday morning, Sir David Norgrove, the chair of the authority, upheld the Scottish Finance Secretary’s complaint.

Responding to the ruling, Mackay said: “The Tories are so desperate to talk Scotland down that they have resorted to deliberately distorting the truth. Sadly for them they’ve been caught-red handed peddling a line the UK Statistics Agency have branded as ‘incorrect.’

“This will be hugely embarrassing for the Tories and shows that when it comes to Scotland’s economy they simply can’t be trusted to be honest with people.

“The reality is that Scotland’s economy is strong and our tax receipts show strong and sustained growth. Contrast that with the dismal future on offer in a Tory Brexit Britain and it is little wonder support for independence is on the increase.”

Finance Secretary Derek Mackay had submitted a complaint over the claim

In his letter to Mackay, Norgrove wrote: “The statements in the press release, subsequently repeated by the Chief Secretary, clearly link the whole of the reconciliation in tax receipts and block grant adjustment to slower than expected economic growth in Scotland.

“We agree with you that this is incorrect.

“The principal reasons for the block grant adjustment were, in fact, an initial overestimate of the Scottish tax base and faster growth of tax receipts than expected in the rest of the UK.”

Norgrove also made clear that the Authority would ask the Treasury to “improve the presentation of the Scottish fiscal framework”.

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The figure quoted by Truss in her Daily Mail column and in the Treasury’s press release relates to the block grant adjustment (BGA), agreed as part of the Fiscal Framework.

Effectively, the more revenue raised through taxes in Scotland, the less money the Treasury has to give the Scottish Government in the block grant.

For 2017-18 there was an overestimation of what this deduction should have been. The amount that the treasury takes away is a best guess, based on what’s called the initial deduction – the amount raised from taxes in 2016/17 – and the indexation measure which is the rate at which “comparable revenues” in the rest of the UK have grown.

Once out-turn data – the actual amount raised by taxes – becomes available there is an adjustment.

Scottish revenues were lower than originally forecast by £940m.

But the Treasury had also expected growth in taxes in the rest of the UK to be much greater, and so adjusted the block grant accordingly. However, they were out by £737m. That means the net impact is £204m.

A Treasury spokeswoman said they would consider the authority’s recommendations:“We aim to explain our work in an approachable manner for the public and it remains the case that the Scottish Government now faces a far smaller shortfall due to the jointly agreed Fiscal Framework.”