The biggest row between the Scottish government and Westminster has broken out over the Treasury's refusal to advance the SNP £2billion to pay for the new Forth crossing.

The SNP, which has failed on its manifesto pledge to set up the Scottish Futures Trust as an alternative to the Private Finance Initiative, asked Alistair Darling for the cash advance last month, promising that the money would be paid back over 20 years.

But in a humiliating blow for Alex Salmond, the Government dismissed the request as “not credible”. The Chancellor said yesterday that the scheme to “borrow money from budgets which are yet to be allocated over an extremely long period - that's something that we simply don't do”.

Mr Darling added: “I think they [the SNP] ought to have been aware of it, and they could have found out if they had asked earlier.”

The First Minister said yesterday that he would not take no for an answer and would meet the Government to discuss the matter further.

“When we have these productive discussions, he [the Chancellor] will see the great virtue in our plan to enable Scotland to go ahead with this extraordinary capital investment without impinging and forcing a delay on capital projects in Edinburgh, for example,” Mr Salmond added.

The possibility of spending cuts in the capital, of which the Chancellor's own constituency of Edinburgh South West is part, was raised after Yvette Cooper, Chief Secretary to the Treasury, wrote to John Swinney, the SNP Finance Secretary, rejecting his funding request.

In her letter she said: “The UK-wide public spending framework does not allow for bringing forward spending in this way to fund major infrastructure projects”.

Scottish government sources said that the rejection of their funding plan meant that other transport projects, including the A9 from Perth to Inverness becoming dual-carriageway and upgrading the A82 between Glasgow and First William, would be squeezed or cut.

The new Forth crossing became a priority because of corrosion to the exisiting road bridge. Work on the new bridge is due to begin in 2011 and end in 2016.

Mr Darling said that the crossing was needed but that the SNP government was responsible for its funding.“If you are contemplating large projects like this you do need to make choices. The Scottish government is no different from other large organisations. I am sorry that for ideological reasons they have ruled out using Public Private Partnerships.”

Andy Kerr, Labour's finance spokesman at Holyrood, attacked the SNP for failing to come up with a credible funding package for the bridge and demanded that it guarantee that the project would still go ahead.

“The SNP has paralysed investment projects in Scotland because it cannot get its Futures Trust to work,” he said.

A spokesman for the Scottish government said the building of the new bridge was not in doubt despite the cross-border row over funding.

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