JEREMY Corbyn’s anti-austerity credentials will be damaged beyond repair this week if Labour backs the Tory plans to eradicate the deficit, Nicola Sturgeon has warned.

The First Minister said that if Labour MPs supported George Osborne’s “fiscal mandate” on Wednesday, it would expose Corbyn’s rhetoric against austerity as a sham.

In the first unadulterated Tory budget in almost 20 years in July, the Chancellor set out a strict target of eliminating the overall deficit this parliament and moving to a surplus in 2019-20.

In order to hit the target, Osborne plans to cut welfare by £12bn and other public services by £20bn, as well as lowering the national welfare spending limit by 13 per cent.

Last month, Corbyn's shadow chancellor, John McDonnell, said Labour would back the overall goal, although it would suggest radically different tax and spending policies to achieve it.

However in a report this week, the Scottish Government will lay out an “alternative fiscal plan” and claim a different approach would mean £150bn more for public services.

The UK government cuts “go beyond what is required to balance the budget”, with the welfare and public service cuts “not required”, ministers will argue.

Sturgeon said: “This week is a key test of Labour’s credentials under Jeremy Corbyn - and it is a test they dare not fail if they are to be taken remotely seriously as an opposition.

“Because if Labour do not vote against the Tories’ spending proposals, all of their anti-austerity rhetoric will be exposed as empty bluster - and it will confirm the SNP as the only serious party of opposition in the Commons."

The key difference with Osborne’s fiscal mandate is that the SNP plans would not end the deficit - instead only day-to-revenue spending would be brought into balance by 2020.

Borrowing would continue to provide capital funds for infrastructure investment.

Osborne’s mandate eliminates “net borrowing” for both revenue and capital spending.

The Office of Budget Responsibility (OBR) says Osborne’s plans would see borrowing move from a deficit of 4.9 per cent of GDP in 2014-15 to a 0.4 per cent surplus, or £10bn, by 2020.

Under the SNP plan, the deficit would still be 2 per cent of GDP, or £50bn, in 2019-20.

Sturgeon added: “As our alternative proposals demonstrate, not only are these cuts ideologically driven, they are also unnecessary.

“Our paper outlines an alternative to ensure the debt and deficit are put on a downward path while allowing up to an additional cumulative £150bn of investment across the UK by 2019-20 – with around £12bn in Scotland.

“There is a different path to austerity available – as our alternative option shows, it is a viable path and it is an opportunity that the UK Government should grasp.”

Many inside Labour have already advocated a similar plan to Sturgeon’s, balancing the revenue side of the budget while continuing to borrow to fund building projects.

Former Labour minister Michael Meacher last month warned the Osborne plan would suck spending out of the economy and damage growth, and recommended borrowing to invest.

A Scottish Labour spokesman said: “The First Minister knows that Labour is the anti-austerity alternative to the Tories. To say otherwise is barely credible.

"The fiscal charter gives the UK government flexibility to increase spending. That's not our words but the words of Nicola Sturgeon earlier in the summer.

"The First Minister is contradicting herself and must be rattled after a week when her party's social justice credentials have been left in tatters after the revelations about her business spokeswoman profiteering from desperate families losing their homes.”