The Scottish Government will receive the biggest real terms funding deal in the history of devolution, Chancellor Rachel Reeves has said as she challenged SNP ministers to use the money “effectively” to improve public services.

The Scottish Government is now on course to receive £47.7 billion in 2025-26 – including £3.4 billion due following decisions by Ms Reeves on Wednesday in what was Labor’s first budget since 2010 .

Calls from Prime Minister John Swinney for the two-child cap on some benefits to be removed and for the UK government to reverse its decision to make winter fuel payments means-tested have been ignored by the Chancellor.

But before Ms Reeve’s statement, he also called on the UK Government to “significantly increase” funding for Scotland.

Ms Reeves said her Budget – the first ever by a female Chancellor – will provide the devolved governments with “the biggest funding deals in real terms since devolution”.

She said it was “funding that must now be used effectively in Scotland to deliver the public services that the people of Scotland deserve”.

Her comments come as she insists the tax and spending proposals she has presented mean there will be “no return to austerity”.

The chancellor announced £40 billion in extra taxes a year as she increased government borrowing and spending to “build Britain back”.

But she told MPs action was needed to address the “black hole” in public finances left by the Tories, while pumping billions into schools and hospitals.

Ms Reeves also pledged money for city and growth deals, including one in Argyll and Bute where the Scottish and UK governments will each contribute £25m to the scheme, money for 11 hydrogen projects green in the UK, including East Renfrewshire, which she promised. It will be “one of the first commercial-scale projects in the world”.

Chief Secretary to the Treasury Darren Jones said the budget means the Scottish Government “receives 20% more per person than equivalent spending in the rest of the UK”.

He added: “This will give the Scottish Government certainty over public finances to invest, reform and modernize public services, as well as drive investment and generate growth in Scotland. »

Scottish Secretary Ian Murray hailed it as a “historic budget for Scotland that chooses investment over decline”.

He said an increase in the minimum wage – to £12.21 an hour for over-21s – would deliver a pay rise to “hundreds of thousands of workers in Scotland”.

He added: “The Budget protects Scottish workers, provides more money than ever for Scottish public services and signifies the end of the era of austerity. »

Scottish Finance Secretary Shona Robison said the Scottish Government was “working through the details of the budget” but said it was “a step in the right direction”.

Ms Robison said the government will need to consider the impact of increased employers’ social security contributions on public finances, and also stressed that it “would take more than one budget” to “repair the damage caused by years of austerity.

But she added: “We are very pleased that our calls to invest in public services have been heard and this is, as I said, a step in the right direction. »

Roz Foyer, general secretary of the Scottish Trades Union Congress (STUC), said the chancellor had made an “impressive start” with her first Budget.

“More than 14 years of Conservative government austerity cannot be reversed in a single budget, but potentially delivering a £3.4 billion increase to the Scottish Government’s coffers is a telling and impressive start,” he said. she declared.

Economics expert Joao Sousa, deputy director of the Fraser of Allander Institute at the University of Strathclyde, said Scotland had benefited from a “very significant increase in spending”.

He added that it would “likely make the Scottish Government’s task of balancing its budget much easier”.

However, Mags Simpson, acting director of CBI Scotland, said Ms Reeves had presented a “tough budget for businesses”.

She said increasing social security contributions for employers, along with other measures, “will increase the burden on businesses and affect the ability to invest and ultimately make it more expensive to hire personnel or salary increase.

She added that Scottish ministers must ensure that additional funding coming from the North “is invested in measures that encourage business investment and promote long-term sustainable growth”.