THE scale of the change required to implement Scotland's new financial powers has resulted in "significant staffing implications", watchdogs have warned.

Audit Scotland said the Scottish Government could struggle to recruit the skilled staff needed to set up and manage new responsibilities for taxes, social security and borrowing.

The amount of money raised in Scotland is to rise from about £4 billion before the 2012 and 2016 Scotland Acts were introduced to £22 billion by 2020.

More than half, 52 per cent, of Scotland's budget will be raised directly in Scotland, compared to just 10 per cent in 2014/15.

Auditors noted the number of full-time equivalent Government staff reduced by 6 per cent from 5491 in March 2010 to 5152 six years later.

The report states: "Successfully implementing and managing the new financial powers will require enough staff with the right knowledge and skills

"Recruiting staff with the technical experience required, for example in finance and programme management, may prove difficult."

Audit Scotland said difficulties had already become apparent in recruiting to the Scottish Fiscal Commission, the body which will provide financial forecasts for Scotland.

Recruitment campaigns that ran from September to December 2016 did not fill all posts on a permanent basis, including the chief executive position, which is not expected to be filled permanently until summer 2017.

Auditors also said Scottish ministers must develop effective arrangements to manage the new powers and provide "clear, reliable and easily understandable" economic and financial information.

The Scottish Government had spent £18.5 million implementing the new financial powers at the end of 2015/16, mainly on setting up and operating the Scottish rate of income tax.

The report praised the Government's "good programme management" in place but called for a "clearer picture of potential future costs" and regular monitoring of spending, highlighting expenditure is due to increase "significantly" over the next four years with the devolution of new social security powers.

It also recommends a "step-change" in public financial management and reporting as Scotland's budget becomes exposed to "increased risk of volatility and uncertainty".

This should include a medium-term financial strategy based on clear policies and principles and the Government should finalise and publish its approach to borrowing and reserves, it said.

Caroline Gardner, Auditor General for Scotland, said: "Implementing and managing the new financial powers will transform the work of the Scottish Government on an historic scale.

"It's made some good progress by getting the foundations in place for managing the new powers but the major funding and staffing implications of the next stage of financial devolution must be planned for and managed in an open and transparent way."

Finance Secretary Derek Mackay struck a deal in his Budget with the Green Party that will see, from next month, the 40p income tax threshold kept at £43,000 north of the Border.

The 40p threshold rises to £45,000 south of the Border.

He said: “I am confident we have robust plans in place to ensure smooth delivery of the service.”

He said the report recognised the Government is “well-organised to deliver substantial changes to our public finances.”