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Mr Sunak told MPs the difference between the SNP and his own party is the Conservatives choose to support public services.
He was speaking during a session of oral questions to the Treasury in the House of Commons, where the SNP’s Treasury spokesperson Alison Thewliss called on the Chancellor to increase funding to the devolved administrations.
The Conservatives explicitly pursued an austerity agenda when they came to power in the wake of the global financial crisis in 2010.
Day-to-day public service spending was cut by around 9% between 2010 and 2019, according to the Institute for Fiscal Studies think tank.
The Local Government Association has said councils lost almost 60p in every £1 of central government funding during that time.
In 2019, the then-chancellor Sajid Javid declared the “end of austerity”.
What’s clear is that in spite of the largest increase in public spending in the United Kingdom for some decades, record increases in public spending, the Scottish Government are now imposing austerity
Speaking in the Commons on Tuesday, Ms Thewliss said: “This year the Scottish Government have faced over a 5% real-terms cut in resource funding compared to last year’s budget, and the spending review took place when inflation was only at 3.1% – it has now tripled and continues to rise.
“This increase will impact on Scotland’s recovery from the pandemic and place severe pressures on public services and public sector wages.
“Will the Chancellor increase funding to devolved governments in recognition of this record inflation he presides over?”
Mr Sunak referenced the Scottish Government’s spending review, saying: “What’s clear is that in spite of the largest increase in public spending in the United Kingdom for some decades, record increases in public spending, the Scottish Government are now imposing austerity.
“Austerity in local government, in education, in justice, in environment, all budgets that are growing slower than inflation.
“Not happening elsewhere in the United Kingdom.”
He added that health budgets are growing faster in England than Scotland, and suggested the differences were due to the Scottish Government increasing its welfare budget “by 50%”.
Ms Thewliss responded, saying the Chancellor knows that the Scottish Parliament “operate on a fixed budget, they do not have the levers that he has”.
The Chancellor said: “On our side of the House we choose to support the NHS, we choose to support public services, in Scotland they (the SNP) are choosing to impose austerity on public services, that is the difference between us and the SNP.”