Image copyright Getty Images

George Osborne's plan to raise more money than he needs to spend is "unacceptable" when he is cutting benefits, according to John Swinney.

Scotland's deputy first minister has written to the chancellor ahead of his Autumn Statement.

Mr Osborne has argued a surplus is needed while the economy is growing.

Scottish Labour leader Kezia Dugdale has also sent a letter to him warning of the "devastating consequences" of his cuts to tax credits.

In his letter, Mr Swinney said the tax credit cuts would deprive a quarter of a million households, many living on low pay and raising children, of an average £1,500.

'Limited borrowing'

He also urged the chancellor to do much more to support the North Sea industry, which is struggling in the midst of an oil price slump.

Image copyright PA Image caption John Swinney and Kezia Dugdale have written to the chancellor ahead of his spending review announcement

And he repeated a call for the Treasury to make Police Scotland exempt from VAT, as the old eight forces were, insisting it is depriving the cash-strapped national force of £30m a year - more than enough to cover its spiralling budget shortfall.

Mr Swinney said: "Given the growing opposition to your plans for further cuts to public services and social security, and the impact that they are having on families across the country, I urge you to change course.

"The Scottish government has outlined a path for UK fiscal policy that ensures the public finances remain on a sustainable path, reducing the deficit, whilst also allowing for increased investment in public services.

"One option would be to target a current budget balance rather than an overall budget surplus from 2019-20 onwards.

"This target ensures that no borrowing is required to fund day-to-day public services. Limited borrowing would be undertaken only to support capital investment aimed at boosting the UK's long term productive capacity."

The UK government wants to cut tax credits to save £4.5bn a year from 2016, arguing that most working families will still be better off by 2017, as a result of the introduction of the National Living Wage and changes to income tax thresholds.

Mr Osborne has vowed to press ahead with changes aimed at bringing tax credit spending "under control" despite the House of Lords voting to delay the cuts.

The chancellor has also said that having a budget surplus is necessary, in normal times, "to bear down on debt and prepare for an uncertain future".

Image copyright Getty Images

A UK treasury spokesman said: "On Wednesday the government will set out its plan to deliver economic security for the whole of the UK so that we can enhance our national security, and extend opportunity to all.

"Key to this is delivering sustainable public finances and getting the deficit under control to prepare the country for any economic shocks that lie ahead.

"The chancellor has already made clear that the government will listen about how we make a transition to a higher wage, lower tax and lower welfare economy he wants to see.

"The end goal is clear - this country cannot have an unlimited welfare budget that squeezes out other areas of public expenditure."

In her letter to Mr Osborne, Ms Dugdale urged him to halt the tax credit cuts.

She said: "When you announce the results of your joint Spending Review and Autumn Statement on Wednesday you must reverse your plan. It is unfair and it will drive hundreds of thousands of working families into poverty.

"Tax credits work. They have lifted hundreds of thousands of children out of poverty and allow families across Scotland to aspire to more than just making it to the end of the month."

The Scottish Labour leader has also written to the first minister urging her to match Labour's commitment to use Holyrood's new powers to ensure people in Scotland do not lose money if Mr Osborne continues with the cuts.

Nicola Sturgeon has previously pledged to deliver "credible, deliverable and affordable plans" to protect poorer families in Scotland from tax credit cuts.