KATE Forbes has set aside £20 million for a second independence referendum next year, despite warning of major cuts to public sector spending in Scotland

Labour accused the government of wasting money "on a divisive referendum while cutting local services to the bone."

But the Scottish Greens defended the decision, accusing the opposition parties of "deliberately misunderstanding how democracy works".

Speaking at Holyrood, as she set out the Scottish Government’s resource spending review, the finance secretary warned that Scotland was facing an "unprecedented cost of living crisis". 

Ms Forbes told MSPs that there had been a "real-terms reduction of 5.2 % between last year and this" in the money available to ministers.

She added: "Our real terms funding grows by only 2% across the whole four-year period, after accounting for the devolution of social security benefits.

“That is the stark reality – reflected in the commentary by the IFS and Fraser of Allander Institute last weekend.

“But it is not inevitable – it is the result of a deliberate choice by the UK Government – as they sit on their hands.

“While the Chancellor has provided welcome if limited support for households, the chill winds of Tory austerity are blowing when it comes to spending on public services.”

According to the IFS thinktank, budgets for local government, the police, prisons, justice, universities and rural affairs are set to fall by around 8%, equivalent to a real-terms cut of £1.1 billion from these areas of spending over four years.

The budget for enterprise, tourism and trade promotion is set to fall by 16% in real terms over the next four years.

While funding for the Health and Social Care portfolio is set to increase by 0.6% a year in real-terms over the next four years, this, the thinktank says, "is much slower than required to meet rising costs and demands for services."

However, the detailed budget for Constitution, External Affairs and Culture spending revealed that Ms Forbes had allocated £20 million for a vote on independence. 

Total spending for the department will remain at £294 million, except in 2023/24 when the indyref2 funding will see it jump to £314 million. Kate Forbes sets aside £20 million for indyref2 despite cuts to local services 

Tory MSP Douglas Lumsden said the SNP government were “nothing if not predictable.”

He said: “They present data that shows that their tax policies are failing and their spending is out of control."

Mr Lumsden told MSPs there was a £3.5 billion black hole in the government's funding by 2026-27, and that the SNP were trying "to pass the buck of responsibility on to the UK government."

He added: “With the public finances in such mess would the Cabinet Secretary not agree with me that the £20 million allocated for another divisive independence referendum is a slap in the face for so many hard-working Scots who are having to pay more and get less?”

The minister did not respond to the remark about the vote on the constitution but said Mr Lumsden had not based his question on the facts in front of him. 

She said he and other Tory MSPs, by warning of a £3.5 billion black hole, were quoting out of date figures. 

“You cannot have unbalanced spending plans within a devolved arrangement where I can only spend what is raised.” 

Ms Forbes said the Tories should “lobby their UK government colleagues to increase funding to the Scottish budget.”

After the statement in parliament, Scottish Labour's Finance spokesperson Daniel Johnson said: “Scots are about to be hit by the worst drop in disposal cash since records began but the SNP have nothing to offer except empty rhetoric and the same old spin. 

“Fifteen years of failed SNP economic policy have got us to this point, and this dire update promises more of the same.

“They are slashing support for economic development as our economy falls off a cliff and wasting £20 million on a divisive referendum while cutting local services to the bone."

Scottish Greens MSP Ross Greer told The National: “Both the Scottish Greens and the SNP committed to an independence referendum in our manifestos for the May 2021 election. 

“Our parties combined won more votes than the three anti-referendum parties combined, which is the normal measure of who won an election. 

“Our shared commitment to a referendum was reaffirmed in the August 2021 Bute House Agreement which brought Greens into government. 

“The Scottish Government has a clear mandate to fund that referendum and through it the people of Scotland will determine our future. It’s really quite simple.”

Pamela Nash, chief executive of Scotland in Union, said: “This is a gross waste of public money at a time when our NHS is desperate for resources and households face a cost-of-living crisis.

“SNP politicians are completely out-of-touch with the people of Scotland.

“Poll after poll has confirmed that the overwhelming majority of voters in Scotland do not support Nicola Sturgeon’s timetable for a divisive second referendum on leaving the UK next year.

“Rather than obsess about their negative campaign to divide Scotland, ministers should focus on fixing the mess they have made of our public services.”

The 2014 referendum cost the government £15.8m, with the majority spent on providing counting officers across Scotland.