John Swinney outlines spending cuts for Scotland

Mr Swinney told the Edinburgh parliament there would be a public sector pay freeze for those earning more than £21,000 a year.

But with parliamentary elections in May, he refused to spell out where other cuts would be made over the next four years. The Budget relates to 2011/12 only, and Mr Swinney ignored opposition calls for him to explain what will happen after then.

He said Scotland was having to cope with £1.3bn less from London next year, as a result of Chancellor George Osborne’s spending review. But this figure is disputed by the Coalition Government, which says the Scottish budget has been cut by £900m.

Mr Swinney added: “This is a Budget that addresses a financial challenge without precedent since devolution. Despite the biggest reduction in public spending imposed on Scotland by any UK government, this is a Budget that protects jobs, economic recovery and frontline services.

“In bringing forward my proposals, I have been guided by three over-riding priorities: to promote and secure Scotland’s economic recovery; to protect and invest in Scotland’s vital frontline public services; and to take forward action on climate change so as to maximise Scotland’s potential.”

With the NHS protected and a council tax freeze already announced, there is speculation that future cuts could be made in the transport, rural affairs and culture budgets, but a final decision will depend on May’s elections to Holyrood, where the SNP is running a minority administration.

Mr Swinney said: “As we ask public sector workers to accept pay restraint in order to protect jobs and maintain demand in the economy, the Government reaffirms our social contract by providing the resources for the full removal of prescription charges and for a freeze in the council tax for a fourth year in succession.

“Central to this is our commitment to maintain health spending in real terms and to protect local government funding by maintaining its share of the Scottish budget.

“And the budget also provides for a living wage of 7.15 pounds an hour, where the Scottish Government has pay responsibility, and protects the lowest paid in the public sector.”

The Finance Secretary said Scotland would have £3.3bn less to spend over the next four years after the spending review – an 11 per cent cut. This would mean a £1.2bn fall in the capital budget – “a staggering 36 per cent”.

It was not just the Conservative/Liberal Democrat Coaliton that was at fault, said Mr Swinney. “Two-thirds of the cuts were planned by the previous Labour Government – which Alistair Darling described as ‘deeper and tougher than those under Thatcher’.”