Deputy first minister John Swinney has warned Liz Truss’s tax cuts proposed during the Tory leadership election could have a negative effect on the Scottish budget.

Mr Swinney told BBC Scotland’s The Nine on Wednesday evening he did not think the UK government led by Ms Truss “believed in public services”.

The comments came after he announced that £500 million in cuts would have to be made to the Scottish Government’s budget on Wednesday.

He said: “What I take from the direction of travel of the new Prime Minister’s government is this is going to be a government that does not really invest in public services and does not believe in public services.

“That presents some very real dangers to the public finances of Scotland.

“Essentially if the Prime Minister changes the balance between the amount of tax raised and the amount of public spending, and goes down the route of of reducing public spending, there is a risk that public spending in Scotland could fall as a consequence because of the way in which the block grant is calculated by changes to public expenditure in England.

“We need to see exactly what proposals the Prime Minister comes forward with and of course, there is a danger that the Prime Minister can bring forward proposals which will actually have a negative effect on our budget, depending on the way in which she decides to undertake those tax reductions.”

The Perthshire MSP argued that the Scottish Government is dealing with a “finite sum of money” and cited pay demands from public sector workers as a reason for making “difficult decisions”.

Mr Swinney added: “We can’t borrow. We can’t change taxes. We can’t take steps to expand the size of the resources available to us. We have to live within those resources and I have a duty to balance the budget over the course of a year.

“With the effect of the cost crisis, the cost of delivering public services is increasing. The pay demands that we are meeting are obviously higher than we budgeted for. And as a consequence, we have got to take some really difficult decisions to enable us to balance the budget.

“There are no easy choices in this current environment.

“I understand that public sector workers clearly are worried about their own financial situation.

“But fundamentally, if we want to pay for those deals, we’ve got to take money away from other public services and our public projects.”