Public sector pay rises in Scotland could partly be funded by a £ 41m lump sum ministers received as part of efforts to alleviate the cost of living crisis in England.
Finance Secretary Kate Forbes was asked what she planned to do with the money after i revealed that it had still not been allocated almost a month after being announced.
She told MSPs that rather than being used to fund a specific scheme, some of the sum was likely to be needed to fund pay rises for staff in councils, schools and the NHS.
The delay in announcing where the money would be directed has prompted accusations that ministers are “refusing to act” while thousands of households struggle to pay their bills.
On Thursday 26 May, the Treasury said Scotland would receive £ 41m in Barnett consequentials as a result of a £ 500m increase to the Household Support Fund in England.
This fund is aimed at vulnerable households in England, with Holyrood ministers told at the time to “urgently set out” how they planned to distribute this to low income households.
Giving evidence to Holyrood’s Social Justice and Social Security Committee on Thursday, Ms Forbes was asked what she planned to do with the cash.
She insisted that “every single penny” received from the UK Government to alleviate the cost of living crisis would be spent on the cost of living measures in Scotland.
She added: “I believe that pay is directly one of our cost of living measures. So right now we’re obviously engaged with a number of pay negotiations, quite rightly.
“We are conscious of other negotiations ongoing right now. I think you have to see pay as a cost of living measure. ”
The Finance Secretary also said she felt it was prudent to keep some money in reserve, due to the “extreme volatility” in the economy and rapidly rising inflation.
She said inflation could drive up demand for the Scottish Government’s existing measures to help people on low incomes and rejected the idea that the money would “sit there unused”.
She added: “The UK Government is absolutely adamant that it’s not going to do anything further on the cost of living right now, because of what they perceive to be the risks of contributing to inflation.
“So I can not foresee any further consequentials coming down the line. So I also think that we need to make sure that any funding that we have in hand is used well, but it’s used to cover the rest of the year. ”
Both Ms Forbes and public finance minister Tom Arthur declined to say if there would be any further announcement on the cost of living measures before Holyrood goes into recess at the end of next week.
In a statement at Holyrood, Mr Arthur revealed that the Scottish Government was carrying over £ 650m of unspent money from the previous financial year into the next.
However, he insisted this was “maximizing the effective use of our budget” and that about a third of this sum was from UK Government consequentials that were only confirmed six weeks before the end of the financial year.
“Every penny has been allocated in full, allowing us to implement measures at the most optimal time, rather than being constrained to a single financial year,” he added.
Conservative finance spokeswoman Liz Smith said: “When we have businesses struggling with debt, amid a recruitment crisis and rising costs, and many families are really struggling with the cost of living right now it is totally unacceptable that the SNP is not releasing money which they already have to tackle this.
“The Cabinet Secretary must confirm to Parliament before next week’s recess how she intends to spend that money to help low income families that desperately need help now.”