SNP ministers may have to cut budgets in order to fund public sector pay deals without extra cash from Westminster, the Deputy First Minister has warned.

John Swinney rang the alarm in a letter to Chancellor Nadhim Zahawi as he outlined concerns that last year’s UK spending review did not take into account the level of pay increases proposed by independent pay review bodies.

Mr Swinney, who has taken on the finance and economy portfolio while Kate Forbes is on maternity leave, also claimed the spending review did not take into account the wider effects of soaring levels of inflation.

He has warned that without further funding, the Scottish Government may only be able to issue similar pay rises by reducing budgets elsewhere.

He wrote: “Further to the joint letter from devolved administration finance ministers to you on July 15, and in light of the UK Government’s subsequent announcements regarding public sector pay, I am concerned that no associated funding is being provided to meet these additional costs.

“Last year’s UK spending review, which as you know determines the majority of the Scottish budget, did not take account of the levels of pay uplift now proposed or indeed the wider effects of inflation.

“The associated reduction in spending power across public sector budgets is deeply worrying for our public services and our capacity to respond to the cost-of-living crisis, which will undoubtedly bring renewed challenges through the coming autumn and winter period.”

He added: “Given our fixed budgets, our restricted borrowing powers and the inability to change tax policy in year, the lack of additional funding for public sector pay deals via the Barnett Formula means the Scottish Government could only replicate these pay deals for public workers in Scotland with deep cuts to public services.

“I would urge you to consider appropriate funding for public sector pay, and would welcome early discussions with you on this matter.”

Scottish Conservative shadow finance and economy secretary, Liz Smith, said: "This is a brass-necked attempt to blame the UK Treasury for the SNP's failure to fund public services in Scotland.

"But the real story is that the nationalists have created a £3.5 billion black hole in their finances according to the IFS, and have already cut frontline services to the bone."

"They've got some nerve trying to shift the blame elsewhere — council workers are about to strike because the SNP left local authorities so cash-strapped they can't improve pay.

"That's despite massive additional support from the UK Government, including the largest block grant from Westminster in the history of devolution."

A UK Government spokesperson said: “We have provided the Scottish Government with a record £41 billion per year for the next three years, the highest spending review settlement since devolution.

“As a result, the Scottish Government is receiving around £126 per person for every £100 per person of equivalent UK Government spending in England over the next three years.

“We’re also helping to tackle the rising cost of living, protecting eight million of the most vulnerable families with direct payments of £1,200 this year, and providing additional payments to pensioners and disabled people.”