JOHN Swinney has said the Scottish Government will “reflect carefully” on tax decisions announced by the UK Chancellor – but insisted the approach will be based on “fairness”.

Scotland’s Deputy First Minister – who has taken on the finance brief while Finance Secretary Kate Forbes is on maternity leave – said the tax cuts announced by Kwasi Kwarteng on Friday will have “significant” consequences.

The Chancellor announced a raft of measures, including cutting the basic rate of income tax to 19p in the pound and scrapping caps on bankers’ bonuses – plans that Swinney said put the UK’s finances in “a very dangerous place”.

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It also saw the top rate of income tax axed for those earning £150,000 or more each year.

The mini-budget has been highly criticised, with the SNP warning it would cause "economic chaos" while charities pointed out that the measures disproportionately help those better off rather than those on low incomes. 

It comes as the pound fell to an all-time low against the US dollar, with experts warning that this could make the cost-of-living crisis worse. 

Speaking on BBC Radio’s Good Morning Scotland, Swinney said: “We will reflect carefully on the announcements that were made by the UK Government on Friday.

The National: Truss and Kwarteng have come under heavy criticism for their economic planTruss and Kwarteng have come under heavy criticism for their economic plan (Image: PA)

“We take an approach to taxation which is driven by the principles of fairness and ensuring we have a progressive character to our tax system.”

He added: “I think it has to be clearly understood that there are some really significant and dangerous moments that we are facing just now.

“We are seeing the UK public finances in a very dangerous place on the back of the tax cuts on Friday.

“Borrowing is increasing, interest rates are rising, investor confidence is declining and the pound is collapsing in value.

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“That’s what the Conservative changes on Friday have delivered for us as well as tax cuts that are benefiting the very wealthy in our society.”

It is estimated the Scottish Government will receive around £600 million as a result of the tax cuts elsewhere in the UK.

But Swinney said that difficult decisions on how that money is spent will have to be made.

The National: Swinney insisted the Scottish Government's approach would be based on fairnessSwinney insisted the Scottish Government's approach would be based on fairness (Image: PA)

Earlier on the BBC programme, Scottish Conservative finance spokeswoman Liz Smith urged the Scottish Government to follow suit with the tax reductions.

“The challenge now is for the Scottish Government to match some of these changes, because what we can’t have is a widening gap between the tax agenda in Scotland in comparison to the UK,” she said.

She accepted there was a “very difficult message here when people see bankers’ bonuses are increasing” at a time when “many people are finding it extremely difficult to pay their bills”.

But she said: “The biggest picture within this is to ensure the growth within the economy.

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“We cannot go along the path that we are on just now where it is sluggish and the jobs scenario is not as strong as it should be, particularly in Scotland where we have got a diminishing working population in relation to total population, there are productivity issues.

“These are really serious because they affect the tax take, they affect the potential for development in the economy in the future and that is what the Prime Minister is trying to target.”

Hitting back at her comments, Swinney said: “Yes, there will be about £600m that will be available to the Scottish Government as a result of the tax cuts.

“But you’ve had a Conservative spokesperson on the radio this morning who wants me to reduce to equal UK decisions and use all of that money to reduce taxation.

The National: Kwarteng's fiscal decisions will benefit the rich rather than those on low incomesKwarteng's fiscal decisions will benefit the rich rather than those on low incomes (Image: PA)

“And then you’ll have the Conservative spokesperson on health on the radio demanding that we spend that same £600m on health.

“Now what that tells us is two things. One, there are difficult choices to be made and two the Conservatives are opportunists who are quite simply trying to spend the same amount of money twice by demanding tax cuts and increasing public expenditure at the same time.”

It comes after Resolution Foundation said that “only the very richest households in Britain” will see their incomes grow as a result of the most significant tax cuts in 50 years following the Chancellor's fiscal statement.

The richest 5% will see their incomes grow by 2% next year (2023-24), while the other 95% of the population will get poorer.