Justice Minister Jim Wallace has described as "absurd" claims that the Scottish Executive has sought to cover up payments to the company running Scotland's only private prison.

He was responding to calls for ministers to "pull the plug" on proposals to build more private jails after the Scottish National Party claimed they would be subsidised by almost �35m.

His comments arrived as the controversy surrounding the issue of private prisons gathered pace.

SNP leader John Swinney has written to First Minister Jack McConnell urging him to "recognise that he has lost the argument" over privatisation.

But Mr Wallace intervened and said that some of the financial arrangements of the private contract were "blindingly obvious".

Jim Wallace: "Absurd" SNP claims

The SNP's call followed revelations that the Scottish Executive has been footing the bill for some of the running costs of the Kilmarnock jail.

The SNP said "hidden" government subsidies for the only private prison north of the border amounted to �690,698 over a two-year period.

Mr Swinney said this accounted for almost 70% of the estimated �1m profit made by Kilmarnock Prison Services in the past two years.

By multiplying that figure over the course of the prison's contract, the SNP predicted that the jail would be subsidised to the tune of �8.7m.

Fierce opposition

Earlier this year ministers unveiled plans to build three new private jails.

The recommendations - which also included a plan to close Peterhead jail - were met with fierce opposition.

The SNP said this figure for subsidies would rise to almost �35m if replicated at the three new private prisons.

However, an executive spokesman said the charges were legitimate ones in line with private prison contracts in England.

The private prisons plan is a thorny issue

He said the arrangement was stated in the contract, first published on the SPS website earlier this year.

The figures, which were released at the weekend, came to light in written parliamentary answers.

They revealed that the executive paid �206,533 to cover Kilmarnock's non-domestic rates in 2000-01, and a further �207,155 last year - a total of �413,689.

On Monday, Mr Swinney said he had written to the first minister asking him to shelve the private prisons plan.

"The Scottish Executive has been caught feathering the nest of private prison operators at the taxpayers' expense," he said.