The Levelling Up and Regeneration Bill is currently going through Parliament and would aim to give local authorities the power to rejuvenate high streets and town centres.
Scotland is already earmarked to receive £212 million in funding over the next few years to “reverse the country’s geographical disparities”.
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But Ms Forbes has issued a fresh warning to Westminster that the proposals should not be used to undermine Scottish devolution, as ministers get no say in how the funding is spent.
In her letter, Ms Forbes said: “We have already made clear our view that while we welcome additional funding for Scotland, it is unacceptable for the UK Government to decide how money should be spent in areas of devolved responsibility, especially without any meaningful consultation or engagement.”
The Scottish Government should be able to “decide priorities”, according to the Finance Minister.
And she stressed her belief to Mr O’Brien that part one of the Bill would require the consent of the Scottish Parliament – but stressed Scottish ministers “would not recommend” approval.
She also warned that the Bill’s proposed environmental outcome reports places risk to well-established processes around environmental protection in Scotland.
UK Government ministers, she said, would “effectively” have the powers to “override these environmental protections in Scotland”.
In concluding, she warns Mr O’Brien to “respect devolved competences”.
She said: “Respect for devolved competences is essential in drafting legislation, and the lack of effective engagement here is troubling.”
She added: “I believe our officials should discuss how to address these (concerns) and look forward to better and constructive engagement on the Bill as it progresses.”
The Prime Minister has said he would not “rule out” cutting VAT on energy bills as families continue to feel the squeeze from the cost-of-living crisis.
But he was non-committal when asked if he would slash fuel duty further, following the cut of 5p per litre to help cash-strapped motorists in March.