Scotland has been hit with a £49.1 million blow to its budget due to a Treasury accounting change.
The funding loss was revealed in the Scottish Parliament’s Spring Budget Revision Report.
The report detailed how changes to International Financial Reporting Standard 16 have slashed Scotland’s discretionary funding.
The revision strips £8.9 million from resource budgets and a staggering £40.2 million from capital funds.
The UK public sector introduced IFRS16 in 2022, with a transition period spanning three years.
The change affects how leases are recorded in accounts, which in turn affects how budgets are calculated.
Despite assurances that the shift would be “budget neutral”, Scotland has lost tens of millions.
Officials told Holyrood’s Finance Committee that the Treasury had promised to provide ring-fenced budget cover.
That promise has not been honoured, according to Scottish Government sources.
Repeated attempts to claw back the cash from the Treasury have failed.
Kenneth Gibson MSP raised the alarm during a session at Holyrood.
He called the Treasury’s move a “shocking” example of bureaucratic accounting hitting frontline funding.
Mr Gibson said it was “unacceptable” for the Treasury to pull money from Scotland through what he called “technical adjustments”.
He warned that the loss directly affects vital public services, especially the NHS.
He also confirmed that the Chief Secretary to the Treasury has refused to restore the missing millions.
Mr Gibson said the move highlights Labour’s continued failure in managing public finances to Scotland’s detriment.
He pointed to the Treasury’s stance as another sign of why Scotland needs control over its own budget.
He argued that full financial powers would protect Scotland from future fiscal raids.
He also claimed only with independence could Scotland guarantee proper investment in services.
The funding gap caused by IFRS16 is now set to add pressure on already stretched public sector budgets.
Opponents of the cut say it undermines devolution and erodes Holyrood’s ability to plan effectively.
There are fears that local authorities will bear the brunt of the missing funds.
There has been no indication the UK Treasury plans to reverse the decision.
Critics say the budget raid shows how little regard Westminster has for Scottish financial stability.
The SNP is expected to continue pushing for the funds to be restored in full.
With vital public services already under pressure, the demand for clarity and action is growing.
Scotland now faces delivering services with significantly less than was initially budgeted.
The debate around financial powers and accountability is unlikely to go away any time soon.
