The Scottish government has confirmed it will follow the UK government in no longer providing winter fuel payments to all pensioners.
The benefit will instead be means tested, while the introduction of a replacement Scottish benefit has been delayed.
Scottish Social Justice Secretary Shirley-Anne Somerville said she had “no choice” after the chancellor announced cuts south of the border.
Ms Somerville said the Scottish government had lost up to £160m in funding it had expected from the Treasury to set up the new benefit.
It came as Scotland’s finance secretary put the brakes on spending to help fund public sector pay deals.
Shona Robison has written to cabinet colleagues advising of stricter rules on discretionary spending.
Chancellor Rachel Reeves announced last month that those not on pension credit or other means-tested benefits in England and Wales would no longer get annual winter fuel payments, worth between £100 and £300.
Ms Somerville said the UK government decision led to a £140m cut in Scottish funding and that they have been left with “no choice” but to follow Westminster.
She added that the Scottish government was in “the most challenging financial circumstances since devolution”.
The Scottish government spending measures introduced by Ms Robison mean departmental plans will be subject to greater scrutiny and in some cases may need to be signed off by the first minister.
Some projects slated to start but not yet underway may also be cut – with details due to be announced to the Scottish Parliament.
The development came as Gers figures revealed Scotland’s public spending deficit increased by £3.6bn to £22.7bn in 2023-24 due to lower oil and gas revenues.
Ms Robison is understood to be concerned about the impact of a financial audit announced by the Chancellor Rachel Reeves.
The Scottish government does not know how much money it will have for the current financial year until further clarity comes from the Treasury.
SNP ministers recently provided additional funds to Cosla to help avert bin strikes. First Minister John Swinney said funding the new offer would mean tough choices ahead for the government.
It comes as NHS staff in Scotland are expected to push for a pay rise in line with increases south of the border.
‘Very difficult decision’
Responsibility for the winter fuel payment was set to be transferred to the Scottish government in September and replaced with a Holyrood-managed equivalent – the Pension Age Winter Heating Payment (PAWHP).
Ms Somerville said the chancellor’s move had cut funding for devolution of the new benefit by between £140m and £160m in 2024-25.
She said that represented nearly 90% of the cost of the PAWHP, which will now not be introduced until winter 2025.
“This has been a very difficult decision and not one we want to, or expected to, be making,” Ms Somerville said.
“However, despite all efforts to review our financial position it is a necessary decision when faced with such a deep cut to the budget and in the most challenging financial circumstances since devolution.”
The Scottish government had estimated that one million Scots pensioners who were eligible for the UK payment would receive the PAWHP of between £100 and £300.
Ministers had said the benefit would be non-means tested, with universal entitlement based on reaching state pension age.
It is separate from the winter heating payment which helps people on low income benefits who might have extra heating needs.
The chancellor has said the UK Labour government has had to make “difficult decisions” due to a £22bn hole in public finances due to overspend from the previous Conservative administration.
Age Scotland policy director Adam Stachura accused the Labour administration of rushing into cuts, which he said were too deep.
The charity boss said the decision would mean at least a quarter of a million pensioners in Scotland on the lowest incomes or living in fuel poverty would no longer receive the “vital” financial support, while hundreds of thousands more on modest incomes would struggle more to pay energy bills.
He urged the UK government to reverse the cuts, which he said was impacting “the devolution of social security and the needs of Scottish pensioners who live in some of the coldest homes in the UK”.
