THE Chancellor has backed John Swinney into a corner with his latest round of cuts.

The cuts across UK Government departments will mean a cut in the Scottish Government’s block grant of £1.5bn over five years.

Unlike the other Whitehall departments however, the Scottish Government, or Mr Swinney to be precise, now has the power to increase income tax.

So George Osborne can tell the Scottish Finance Secretary ‘if you don’t like it, you know what you can do’.

It is a’ put up (taxes) or shut up’ ultimatum from Westminster to Holyrood.

Mr Swinney announces next month what the Scottish rate of income tax will be for the 10p in the pound he controls.

With little more than a week before Christmas and less than six months till a Holyrood election I think we all know the answer to that one.

Mr Swinney, while opposing cuts from Westminster does not have a record of increasing taxes in Scotland to make up the shortfall.

He has imposed the council tax freeze year after year on local authorities who like him have to suck up the cuts.

There are similarities between the two scenarios.

While councils, staff and many who depend on the services might welcome the ability to offset cuts by increasing council tax, to end the freeze policy now would effectively be a tax rise on households across the land.

Mr Swinney and the SNP doesn’t want the blame for that.

The cuts from Westminster are continuing to have a cumulative effect on Holyrood.

While the Scottish Government continues to take cash from its own budget to mitigate the damaging welfare cuts from the Chancellor an effective cut, it will also have to deal with the latest overall budget reduction.

Economically, John Swinney has a choice to raise the Scottish income tax rate but politically he has next to no choice.

While he has said he will “consider” the option of increasing tax it is unlikely to be used especially before an election.

Even in the supposedly progressive Scotland any party that has proposed increasing taxes has suffered in opinion polls and Mr Swinney remembers the old SNP Penny for Scotland policy only too well.

Just like Mr Swinney holding the aces in the negotiations with councils over the council tax freeze this time it is the Chancellor with the strongest hand.

While the Scottish Government has more powers now than ever before George Osborne is still the one dealing the cards and the deck is stacked in his favour.