FIRST Minister Nicola Sturgeon warned yesterday that Scotland will lose billions of pounds under current Westminster proposals for the Scotland Bill.

The Bill is set to bring new powers over tax and welfare to Holyrood and will set out how Scotland’s annual block grant from the Treasury will be adjusted to take into consideration new powers.

But the Scottish and British governments have yet to agree on the fiscal framework, and Ms Sturgeon has criticised the current offer ahead of the latest round of negotiations between Scottish Finance Secretary John Swinney and Chief Secretary of the Treasury Greg Hands.

Under Treasury proposals Scotland could lose about £3.5 billion from the block grant it receives from Westminster in the first 10 years.

Ms Sturgeon warned that “both the original proposals and what has been tabled in the last few days would still reduce the Scottish budget by potentially billions of pounds over the next few years and wouldn’t live up to the principle that was at the heart of the Smith report.”

Ms Sturgeon says her government favours a mechanism which will retain the Barnett formula as a method of determining public spending allocated to Scotland, which was central to the Smith recommendations.

Labour MSP Neil Findlay called on both governments to “thrash out a fair and lasting deal for Scotland.”

A Downing Street spokesman said: “We stand ready to do a deal that is fair for Scotland and fair for the rest of the UK.”