THE UK Government will “not walk away” from the tax powers talks with the Scottish Government but a senior Nationalist accused Whitehall of trying to embed systemic cuts on Scotland that could run into billions of pounds a year.

Tensions remain high as John Swinney, the Deputy First Minister, and Greg Hands, the Chief Secretary to the Treasury, prepare to hold their ninth meeting on Monday in Edinburgh over the so-called fiscal framework, the mechanism by which the new powers will be implemented.

A deal was supposed to have been agreed in the autumn but deadlock has arisen over how to reduce the £30 billion annual block grant Scotland receives as the new tax-raising powers are introduced.

Mr Swinney favours a “per capita index deduction” method, which he believes will secure future funding even if, as predicted, the UK’s population grows much faster than Scotland’s.

Mr Greg believes a “levels deduction” is best as the UK Government makes clear that UK taxpayers should not have to fund Scottish public services more just because Scotland’s population is not growing as fast as the UK’s. But Holyrood believes this option could leave Scotland £7bn out of pocket over 10 years.

Another option, indexed deduction, is believed to be being pushed by the UK Government as a compromise but Mr Swinney believes this will cut Scotland’s revenue by £3.5bn over the next decade and so is unacceptable.

He announced today that he would publish all the key documents relating to the talks ahead of the dissolution of the Scottish Parliament; a sign seen by some as preparing the ground for the talks to collapse. If they did it would lead to recrimination and rancour between Edinburgh and London.

“People have a right to expect open and transparent government and will be able to see and judge for themselves the issues at stake,” said the DFM

David Mundell said he remained "quite confident" a deal could be sealed, telling BBC Scotland's Sunday Politics programme the UK Government was "quite willing to look at accommodating" SNP concerns that Scotland could lose out financially if its population grew more slowly than the rest of the UK’s.

"We want to reach an agreement, we're taking forward issues the Scottish Government have raised in relation to population," the Scottish Secretary said.

He pledged: "We will not walk away, we will stay until a deal is done. It takes two to reach a deal but we're not walking away.”

Mr Mundell added: “I know the people of Scotland want to see the Scottish Parliament have extensive powers over tax and welfare,(to) become that powerhouse parliament."

But Stewart Hosie, the SNP’s deputy leader, warned there was a “considerable distance still to go” and that Whitehall was proposing reductions of up to £7bn over 10 years, which were unacceptable would be detrimental to Scotland.

“The UK Government want to embed systemic cuts into Scotland's funding. I hope a deal can be struck, I would like to see these new powers but there is a way to go."

The Dundee MP added: "The overall level of the block grant, which makes up the bulk of Scotland's funding, is still supposed to be delivered by Barnett. That is agreed by all parties and we cannot have Unionist politicians in the UK Government seeking to undermine that and cut Scotland's block grant in a systemic way, way above anything any devolved tax could compensate for. That's wrong, it's unfair and it breaches the spirit of all the negotiations."

Meantime, Mr Swinney said he was working flat out to get a deal with the Treasury but warned: “With time running out, we need to make substantial progress.

“The fiscal framework must remain true to Smith Agreement which said the Barnett Formula will remain and that Scotland should be no better or worse off as a result of having new powers.

“That cannot be undermined, and I will not sign anything that risks systematically cutting Scotland’s budget, regardless of anything that this or future Scottish Governments do,” he added.

Nicola Sturgeon has said she wants a deal by Valentine’s Day with a February 12 deadline set to enable MSPs to scrutinise any deal before Holyrood is dissolved on March 23 ahead of the parliamentary elections campaign.

But David Cameron has branded the deadline “artificial” and her opponents believe the SNP Government is now intent on crashing the process for electoral advantage; a charge strenuously denied by the First Minister, who insists her administration is “busting a gut” to reach agreement.