The Scottish government is to pause new awards of public money to arms companies supplying Israel, John Swinney has announced.

The first minister said there was plausible evidence that Israel was committing genocide in Gaza – an accusation the Israeli government rejects.

He called for the recognition of a Palestinian state – a move the UK government has said it will do this month if Israel does not meet certain conditions, including a ceasefire.

While tightening restrictions for Israel, Swinney also announced his government would lift a ban on public funding for munitions, allowing for increased support for Ukraine and UK defence.

In a statement to parliament, he said the Scottish government could not ignore evidence that Israel was committing genocide.

Swinney told MSPs: “Previously, we have provided business grants and investment support to companies involved in the design, production, supply and support for military equipment, technologies and services.”

He said that was a necessary duty of government, citing the war in Ukraine to underline the importance of defence.

The first minister said: “In recognition of that changed international landscape, the Scottish government will lift the restriction that we have applied on the use of support for the production of munitions, but in the face of genocide, there can be no business as usual.

“We will pause new awards of public money to arms companies whose products or services are provided to countries where there is plausible evidence of genocide being committed by that country – that will include Israel.”

The pause will apply to funding from the government, the Scottish National Investment Bank and the nation’s enterprise agencies.

However, Swinney vowed that money already pledged for apprenticeships at firms affected by the decision would be honoured.

The Scottish government was recently accused of “student union politics” by the UK government over its long-standing policy of not providing public funding for munitions.

Along with the shift on funding for arms companies, the first minister said 20 children injured in Gaza would be brought to Scotland for medical treatment, while £400,000 will be spent on the creation of a rapidly deployable hospital for use in Gaza.

Scottish Conservative leader Russell Findlay said the situation in Gaza was a “blight on humanity”.

However, he told MSPs that SNP ministers should use their powers “to improve people’s lives here in Scotland”, citing drugs deaths, crime, and the NHS.

Findlay said many people would see the proposal to recognise a Palestinian state as “premature, impractical and counter-productive”.

Scottish Labour leader Anas Sarwar said the situation in Gaza was “beyond intolerable”, adding: “The illegal occupation and genocide must end now.”

Those comments mark a significant point of difference from Prime Minister Sir Keir Starmer, who has never accused Israel of genocide.

Sarwar called for an immediate ceasefire, the free flow of humanitarian aid, the release of all hostages and a two-state solution to the conflict.

The UN’s top court, the International Court of Justice (ICJ), is considering a case brought by South Africa that argues that Israel is committing genocide.

The ICJ, which is yet to deliver a ruling, has granted Israel an extension until January 2026 to present its defence.

Israel has alleged that the ICJ case is motivated by antisemitism.

According to the Hamas-run Ministry of Health, more than 60,000 people have been killed in the conflict since October 2023 – when Hamas fighters attacked Israel – killing about 1,200 people. That sparked a massive Israeli military response.

UN agencies have said there is “man-made mass starvation” in Gaza, blaming the humanitarian crisis on Israel, which controls the entry of all supplies to the territory.

Israel has insisted there are no restrictions on aid deliveries and that there is “no starvation”.

Earlier this week the world’s leading association of genocide scholars declared that Israel was committing genocide in Gaza.

The International Association of Genocide Scholars (IAGS) said that Israel’s conduct met the legal definition as laid out in the UN convention on genocide.

The Israeli Foreign Ministry said the IAGS report was based on “Hamas lies” and poor research.

A spokesperson added that it was Israel that was the victim of genocide.