SERVICES whose funding has been cut by the Scottish Government to cope with inflation this year may “never see the money again”, Holyrood’s independent advisers have said.

The Scottish Parliament’s Information Centre (SPICe) said the diversion of hundreds of millions of pounds to cover increased pay deals could endure for years to come.

It followed John Swinney announcing yesterday that he was cutting £615million from this year’s budget, on top of £560m cut in September, to cope with soaring inflation.

As well as eroding Holyrood’s spending power by £1.7bn in 2022/23, inflation has also driven up public sector pay demands, resulting in an extra £700m of unforeseen costs.

The biggest loser in yesterday’s emergency budget review was the NHS, where £400m will be “reprioritised” for pay, including £116m from Covid and £38m from mental health.

In their latest blog, the analysts at SPICe said although the statement talked of re-profiling and delaying spending, the reality was likely to be an indefinite loss of funds.

Increasing the paybill baseline would have “implications for future budgets”, it said, as the higher rate of pay has to be found in all future years as well as this one.

It said: “On the basis of current pay offers, the costs over and beyond what had been planned at the time of the December 2021 budget total £714 million.

“And note that several of the pay deals have yet to be agreed, including that for NHS staff, which has the largest cost implications.”

The Government’s aim of keeping the total pay bill at today’s £22billion figure would also be “”challenging to achieve without significant” job losses.

It concluded: “Given the squeeze being brought to bear on spending from recent dramatic rises in inflation, it is likely that many of the budgets where savings have been realised will never see that money again.”

The Royal College of Psychiatrists in Scotland said it was concerned about the cuts to mental health services.

Consultant psychiatrist and policy lead at the College, Dr Pavan Srireddy,  said: “Considering the cost of living crisis poses a real threat to the nation’s mental health – it’s frightening that such little thought has been given to this area of the health service.

“Those already living with a mental illness are more likely to suffer the consequences of the looming economic downturn – which will be felt for years to come and as psychiatrists we need to be ready to offer specialist high quality care that we know can make a difference.

“The already tight mental health budget will have to stretch even further to keep pace with soaring inflation. We simply must ensure our mental health services are protected.

 “We are concerned that the proposed cut to mental health budgets at the time of an existing mental health crisis will mean that some people simply won’t get the help they desperately need.

“That’s why we’re calling on the Scottish Government to guarantee that 10% of frontline spend is given to mental health and it receives its fair share of funding.”

Setting out the cuts in parliament on Wednesday, Mr Swinney said there had “never been a time of greater pressure on the public finances”.

He told MSPs: “These savings are not ones we would wish to make, but in the absence of additional funding from the UK Government, we are left with no alternative. 

“We must balance the books while prioritising funding to help families, back business, provide fair pay awards and to protect the delivery of public services.”