Ed Miliband challenged Scottish First Minister Nicola Sturgeon yesterday to “come clean” about the prospect of a £7.6 billion public spending cut in Scotland as a result of the SNP policy of seeking full fiscal autonomy.

The Labour leader said the nationalists’ plan to make Holyrood responsible for all the money it spends would cause “dramatic reductions in public spending” and be a “devasating blow” to working people in Scotland.

Campaigning in Edinburgh, Mr Miliband said: “You can’t build social justice with a £7.6bn funding gap.”

He added that the First Minister’s revelation that SNP MPs at Westminster could vote for full fiscal autonomy for Scotland as early as next year was “one of the most significant events of the campaign so far in Scotland.”

An independent analysis by the Institute for Fiscal Studies has shown that if Scotland pursued fiscal autonomy, it would face a £7.6bn shortfall in its finances because of declining oil revenues.

“I challenge Nicola Sturgeon and the SNP to say how they will fill this £7.6bn gap,” Mr Miliband said. “Which services will be cut?”

Ms Sturgeon hit back at “desperation on the part of the Labour Party” as she campaigned in Stirling, adding: “The only people proposing further austerity are Labour, the Tories and the Lib Dems.”

The latest YouGov poll in Scotland shows the SNP up four points on 49 per cent over the week before, with Labour down four at 25 per cent.