UK government outlines Scots cuts

John Swinney said investment in frontline public services should be maintained

The Scottish government will be expected to make savings of £332m, as part of wider UK cuts.

The move forms part of UK Chancellor George Osborne's plan to save £6bn in the first wave of public spending cuts.

The gross reduction for Scotland is £375m, although an extra £42m is being made available for spending.

Scottish ministers, who have finalised their current budgets, have been allowed to defer the cuts until next year.

The announcement came as Scottish First Minister Alex Salmond was in Belfast with the leaders of the devolved administrations in Northern Ireland and Wales.

'Uncertain climate'

Scottish Finance Secretary John Swinney said the latest reductions came on top of a £500m cut as a result of the 2009 UK Budget, and may plunge Scotland back into recession if they were to be made this year.

He added: "In the last 18 months, accelerated public expenditure has been used to bring forward work on vital infrastructure projects such as affordable housing and public transport helping to sustain thousands of Scottish jobs in the process.

"That's why, in what remains an uncertain climate, it is vital that we maintain investment in Scotland's economy and frontline public services.

"The Scottish government will prioritise economic recovery. That is why we are planning to defer these further cuts until the following year, in order that we can entrench economic recovery."

Mr Salmond met devolved leaders to discuss areas of common ground

The Scotland Office pointed out that putting off the cuts, calculated under the Barnett funding formula, would also result in the £42m of extra funding being deferred.

Mr Swinney said ministers were "under no illusions" about the scale of funding challenges in the coming years, and said the Scottish government was on track to deliver efficiency savings of 6% in 2010-11, after having exceeded last year's £534m target by more than £300m.

These included, he said, capping staff numbers, cutting the number of public bodies by a quarter and reducing the bill for travel and other operational costs.

Scottish Labour finance spokesman Andy Kerr opposed the UK government's reduction plan, saying: "By cutting back too early they are putting the economic recovery in danger and exposing us to the risk of a double-dip recession."

But the Scottish Tories' Derek Brownlee said the new government had been forced to sort out "Labour's mess", adding: "If the UK government can make savings, the Scottish government needs to do the same or explain why it can't."

Meanwhile, Mr Salmond used his meeting with the Welsh and Northern Ireland first ministers, Carwyn Jones and Peter Robinson, to settle on areas of common ground in dealing with Westminster ministers - with spending cuts high on the agenda.

'Huge challenges'

Following the gathering, he said: "In terms of the UK Government cuts, there needs to be a degree of cooperation, and above all there must be fairness and transparency including a fair allocation of funding to Scotland and the other devolved nations for the Barnett consequentials of UK government spending on the London Olympics.

"We must be given maximum flexibility on budgetary matters to make sure we are able to mitigate as best we can the effects of Westminster spending cuts."

He added that there were huge challenges ahead but also opportunities.

The devolved administrations face £704m of savings - the three first ministers pledged to co-operate in the face of central government cuts, but warned pain could not be avoided.

Neither of the two parties which form the UK government, the Tories and Liberal Democrats, have any stake in the three devolved administrations.