TREASURY Chief Greg Hands is expected to talk to John Swinney in the next 48 hours in an eleventh hour bid to break the deadlock in the tax powers talks.

The Whitehall department made clear the UK Government remained “absolutely committed” to implementing in full the Smith Commission agreement, which underpins the new Scotland Bill, and to do so in line with the ‘no detriment’ principle.

“The offer we have placed on the table would have delivered more funding for the Scottish Government than the existing Barnett Formula since devolution in 1999,” declared a Treasury spokeswoman.

“From the outset our position on the fiscal framework has been clear: we stand ready to do a deal that is fair for Scotland and fair for the rest of the UK.

“Negotiations are still ongoing and the Chief Secretary stands ready to talk to the Deputy First Minister early this week,” she added.

The original February 12 deadline has been pushed back. The House of Lords is due to debate the Scotland Bill next Monday while MSPs are due to cross-examine Mr Swinney and Scottish Secretary David Mundell the day after.

The negotiations have boiled down to a difference between the governments on what is meant by no detriment.

Mr Swinney prefers one option for the so-called fiscal framework, which will implement Holyrood’s new tax powers; this is per capita indexed deduction, which the DFM believes will secure Scotland’s revenue into the future.

Mr Hands prefers another option, levels funding, which, he feels will mean increased income for the UK would benefit the UK while increased income for Scotland would benefit Scotland. This symmetrical approach, he argues, would be fair to all taxpayers.

But the Scottish Government believes this latter proposal would embed a systemic cut on Scotland’s revenue, leaving it £7bn out of pocket over 10 years as the UK’s population is forecast to grow twice as strongly as Scotland’s.

The Treasury has said it has offered a “compromise” deal, which would mean the UK taking on part of Scotland’s future population risk and make it £4.5bn better off over the coming decade. But Holyrood insists this would in fact leave Scotland £3bn worse off.

In the last few days, Mr Swinney has made a fresh offer, which he feels would maintain the no detriment principle and be fair to taxpayers in Scotland and in the rest of the UK.

Details of the new offer have not been made public. But a suggestion by the Commons Scottish Affairs Committee to amend the per capita option, which it backs, thereby putting a cap on UK contributions to Scotland, has been swiftly rejected by Mr Hands.

Pete Wishart, the SNP chairman of the committee, has expressed his “disappointment” at such a quick rebuff from the Chief Secretary.

Elsewhere, Scottish Labour leader Kezia Dugdale said her party had “fully supported” the Scottish Government in its bid to get the best deal for Scotland.

She said it was “absolutely right” that Nicola Sturgeon should be arguing that taking on responsibility for Scottish taxes meant Scotland should shoulder the risks but it should not mean losing the rewards from being part of the UK and the system that shared money out across the country.

"I'll continue to support getting the best deal for Scotland. But make no mistake, no-one should leave the negotiating table until we have the best deal; the people of Scotland deserve nothing less," added Ms Dugdale.