SNP ministers underspent their budget by £650million last year as the Treasury gave Holyrood extra billions to help with the Covid pandemic.

Public finance minister Tom Arthur told MSPs that the provisional fiscal outturn for 2021/22 was £47billion against a total fiscal budget of £47.6bn.

He said the remaining £650m, which represents around 1.4 per cent of the budget, had been carried forward in full through the Scottish Reserve for future use.

Opposition parties complained the Scottish Government had failed to pass on enough money to businesses and families struggling through the pandemic.

The sum was made up of £421m of fiscal resource, £183m capital and £46m of finance transactions, which can only be used for loans or investments outside the public sector. 

The sum is the largest in cash terms since the SNP came to power in 2007, however in percentage terms it is around the same as in 2017/18 and 2018/19.

In 2019/20 the underspend was 0.7% of the budget and in 2020/21 it was 0.9%.

Mr Arthur said the underspend had been allocated to key priorities for 2022/23, including tackling child poverty and achieving climate change targets. 

He also said that in 2021/22 the Scottish Government spent over £5.7bn in relation to Covid, including £2.6bn to support health, and £1.5bn in business support and self-isolation grants.

It had also paid £3.5bn in Social Security benefits, including £57m towards the Scottish Child Payment, committed an extra £4 million of humanitarian aid as the first part of a contribution to support the Ukraine crisis, and invested a record £1.9bn to tackle climate change 

He said: “The Scottish Government has had to respond quickly and decisively to significant challenges, in particular the ongoing effects of the pandemic, the cost of living crisis and the tragic illegal war in Ukraine. However, despite these difficult circumstances, our prudent financial management has meant every penny received by the Scottish Government has been channelled to where it was needed the most. 

“We face the same interrelated challenges as other governments across the world but we do so – currently - without the tools and levers other governments have at their disposal.

"The current fiscal framework is inadequate and leaves an imbalance between the risks to which the Scottish Budget is exposed to and the levers that we have to manage those risks. 

“We have delivered on our priorities, maintained the balance of not breaching our fixed budgetary limits and ensured we have sufficient balances to fund our 2022-23 spending commitments.”

Tory MSP Liz Smith asked why businesses and the public did not receive all the Covid support they needed last year when there was a “a large underspend of £650m”. 

She asked Mr Arthur why the Scottish Government was not releasing more money when businesses and families were struggling.

Mr Arthur said the Government spent £4.7bn in business support last year, £500m more than it received from the Treasury under the Barnett funding formula.

Labour MSP Daniel Johnson said Covid and the cost of living crisis meant ministers had a duty to get money out of the door as soon as possible.

He also pointed £650m was very close to the £700m cap on the Scottish Reserve and asked, given the figure was provisional, whether the Government might breach the limit.

Mr Arthur confirmed there was “headroom of £50m” but also said the cap was out of date and was a key issue to be addressed in current talks with the UK Government. 

He added: “There is no Covid funding carried forward into the Scottish Reserve.”

SNP MSP John Mason accused Ms Smith of confusing the public with talk of a large underspend, as the Scottish Government could only underspend, never overspend.

Mr Arthur said only 0.4% of the budget was unanticipated underspend.