SCOTTISH Labour has been accused of a “laughable” lack of credibility on the budget after failing to say how it would stop £700m of council cuts it has railed against for weeks.

Despite repeatedly demanding “radical” use of Holyrood’s tax powers to avoid cuts, Labour finance spokesman James Kelly admitted the party still hadn't drawn up its plans.

During a Holyrood debate on the 2018-19 draft budget that Labour had instigated, he said he needed "adequate time".

During Mr Kelly's opening remarks, the SNP’s John Mason asked: “The member has mentioned £700m. Could he spell out for us how he would raise this £700m? Would there be cuts elsewhere or tax rises?”

Mr Kelly said: “Having seen what a mess the Cabinet Secretary made of his tax proposals, Labour will take adequate time…” before being drowned out by laughter.

He said that was a "perfectly defensible position" given the three-stage Budget Bill process, and the party would reveal its tax plans ahead of the Stage One debate later this month.

The debate ended with the Scottish Government agreeing to improve the draft budget after a narrow defeat.

Labour's motion said the budget would “not protect public services”.

The SNP tried to amend it with a neutral form of words, but failed by one vote.

SNP ministers and MSPs then backed a mildly critical Green amendment, which was passed by 67 votes to 56.

The result was the Government urging itself to “amend the proposals in the draft budget” to “protect public services, fund a fair pay increase for public sector workers and invest in low-carbon infrastructure” before the Budget Bill goes to a final vote in late February.

The Greens, who want an extra £150m for councils and a 3 per cent public sector pay rise, said the SNP “climbdown” showed the need for change.

MSP Patrick Harvie said: “They have accepted our view that changes are needed to protect public services, improve frontline workers’ pay and invest in low-carbon capital projects.

“Labour brought today’s debate to highlight concerns about the draft budget but failed to offer their own solutions. They are letting communities down with their posturing.”

The SNP said Labour had been shambolic: admitting they still hadn’t formulated a tax policy and attacking the Tories before voting with them.

MSP Kenneth Gibson said: “Labour have shown themselves up as completely uninterested in the serious business of government.

“Calling a debate on the budget and then admitting you don’t even have a policy on income tax goes beyond incompetence - it’s completely laughable.

“That absurd approach saw the supposed firebrand left-winger Richard Leonard’s vote with the toxic Tories against a progressive budget - and lose.”

Mr Kelly said: “This is a dramatic climb down from the SNP government. The Nationalists saw that parliament was set to vote for no confidence in their austerity budget, which will inflict an effective £700m cut on our councils, and capitulated to opposition demands. It is increasingly clear the Greens are preparing to sell our local authorities short in this budget.

“Derek MacKay must now come back with an explanation for how he is going to fund an above inflation pay rise for all public sector workers, including local government employees.”