SNP ministers have used short-lived Covid funding to pay for a raft of pre-election give-aways, storing up future problems, the UK’s top economic thinktank has warned.

The Institute for Fiscal Studies (IFS) said tens of millions from the Treasury were being used to fund free school meals, free bus travel, a council tax freeze and possibly above-inflation NHS pay rises.

It warned that using this temporary cash for more permanent policies in the coming year meant tax rises or service cuts elsewhere when the pandemic cash ran out, with the core budget for 2022/23 already looking “tight”.

Scottish Labour accused the SNP of “budget fiddles” in order to deliver election surprises.

In a briefing note about Holyrood funding, the IFS said public funding per person was 30 per cent higher in Scotland than England, despite Holyrood’s budget falling 2% per person over the past 11 years.

It said the Scottish Government received £9.5billion extra in Covid funding in 2020/21, the equivalent of £1,370 per person, most spent on supporting business and jobs.

Holyrood was also in line for £4.2bn in Covid funds for 2021/22.

But while a quarter of the second tranche would go on business rate reliefs, much of the rest was going on long-term policies as a result of the recent Scottish budget. 

It said: “This includes free school meals for all primary school aged children, increased funding for mental health services, free bus travel for those aged up to 21 and a commitment to make permanent the funding for Scottish councils to cover this year’s council tax freeze.”

It said it the recent 4% pay rise for NHS workers might also be paid for out of temporary Covid support.

Allowed permissible under funding rules, the IFS said this could lead to later problems.

It said such policies “will likely have to be funded by the Scottish Government’s ‘core’ non-Covid-19 funding from April 2022”, which could rise by just 1% in real terms.

“This would likely necessitate cuts to a range of services in order to provide bigger increases to areas such as health and schools, or further increases in Scottish taxes.”

It added that “similar stark choices face the UK government”. 

IFS Associate Director David Phillips said: “Excluding temporary Covid-19 funding, the Scottish Government has over £1.30 per person to spend on public services this year for every £1 of spending per person on comparable services in England. 

“Likely tight spending plans in Westminster could mean the next Holyrood administration will have to consider tax increases or cuts to some services – not least to pay for long-term policies on free school meals, public transport, council tax and mental health services, that this year will be paid for using temporary Covid-19 funding.” 

Scottish Labour’s Daniel Johnson said: “We were told fair pay for care workers could only be met through recurring funds, not emergency Covid money.

“If temporary Covid funds are in fact being used for permanent spending commitments, what excuse does the SNP have for Scotland’s heroic social care workers being denied fair pay, and what do they say to those individuals and businesses who have had no or inadequate Covid support?

“We need action now not excuses.

"We need a recovery plan that restores and grows our economy, rather than budget fiddles to deliver election reveals. Businesses need help now, not the delays in support from the SNP.”

Pamela Nash, chief executive of Scotland in Union, said: “Rather than obsess about the timing of another referendum, it’s time for some honesty from Nicola Sturgeon about how a separate Scotland would address the immediate gap between spending and revenue – how much would she raise taxes by and how much would she cut from schools and hospitals?

“But it would be preferable if she would drop her campaign to divide Scotland and instead focus on bringing people together as we recover from Covid.”

In February, Finance Secretary Kate Forbes said: “We have used our limited borrowing and reserve powers to their maximum effect.

"In total that means that the Scottish budget will be over £1.7bn bigger than it otherwise would have been.”