Swinney concerned about budget after ‘chaotic and shambolic' welfare reforms
In a late concession on Tuesday evening, ministers shelved plans to restrict eligibility for the personal independence payment (Pip), with any changes now only coming after a review of the benefit.
The changes, which were made to meet demands from Labour backbenchers, are expected to put pressure elsewhere in the UK Government's budget.
Speaking during a visit to the Museum of Childhood in Edinburgh, Mr Swinney said he welcomed the fact the original proposals had been dropped, saying they were 'completely and utterly unacceptable'.
He told the PA news agency: 'The UK Government has essentially abandoned the heart of their welfare reform proposals, as a result of the chaotic and shambolic handling of the issue by the Labour Government.
'The credibility of that Labour Government is now severely undermined as a consequence of what has happened.'
The credibility of the Chancellor and Prime Minister has been 'undermined', he added.
Asked what the changes could mean for the Scottish Government, Mr Swinney said the situation will be monitored 'carefully' for any potential impact on the devolved budget.
He said: 'I'm concerned about the implications of all of that.
'But it's clear to me that an agenda of punishing the vulnerable and those with disabilities is a completely unacceptable agenda, and I'm glad the House of Commons recognised that.'
The First Minister also vowed he would not replicate the Pip changes in adult disability payment, which is the equivalent benefit north of the border.
Social Security Scotland is responsible for some welfare payments in Scotland.
Mr Swinney said: 'We will not make the changes or to make the cuts that the UK Government was proposing, we've made that crystal clear.'
Responding, Labour insisted the UK government was providing record amounts of money for Scottish public services.
'The Spending Review will deliver an extra £9.1 billion, which the Scottish Government must now ensure reaches the front line,' said a party source.
'Under the SNP, NHS waiting lists continue to rise, the educational attainment gap continues to grow, and employment support has been cut – all of which is making it more difficult for people to enjoy the dignity and security of work.
'John Swinney has run out of ideas and his government has run out of steam, Scotland needs a new direction with Anas Sarwar and Scottish Labour.'
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