Spending Review: Cuts 'threaten 12,000 Scottish jobs'

Cuts to the Scottish budget in the wake of the Spending Review threaten 12,000 jobs, SNP ministers have said.

The Scotland Office said next year's budget would see a £900m reduction, and was less severe than predicted.

But Scottish Finance Secretary John Swinney said he would have £1.3bn less to spend overall in 2011-12.

Meanwhile, Labour said Chancellor George Osborne's plan could cost 100,000 Scots jobs and plunge the country back into recession.

But the Tory-Lib Dem government said the massive spending deficit must be cut.

Details of the Spending Review, which included £81bn in UK spending cuts over four years, were announced in the Commons.

Mr Osborne is to slash welfare benefits by a further £7bn as part of his plan to cut the UK's massive spending deficit.

Scottish spending will be reduced by about 10% in real terms across the four-year period of the spending review, while the UK total is cut by about 11%, The Treasury said.

It added that Scotland will see a 7% cut in resource spending and 38% cut in capital spending.

Scottish Secretary Michael Moore, said: "Scotland will play its part in helping reduce the huge deficit we inherited from the last government.

"Compared to reductions in budgets of other government departments, this is a sensible settlement for Scotland as we get to grips with the challenges we face."

The Scottish government disputed the analysis, saying the cuts actually went beyond what was expected.

Mr Swinney, who will bring his next budget before parliament within weeks, said: "The Chancellor's cuts went beyond our expectations, particularly on swingeing cuts to the capital budget, with an overall cut in next year's Scottish budget of £1.3bn, including an £800m reduction in vital capital spending.

"Today's cuts go far too deep, far too quickly the capital budget cuts alone will threaten some 12,000 jobs in Scotland.

"In its decisions today, the UK government made the wrong choices for Scotland, and threatens to choke off the recovery that we are building in Scotland."

Scottish Labour leader Iain Gray accused the SNP of "weakening Scotland's defences" by promoting independence.

He added: "This Spending Review will mean that over 100,000 Scottish jobs could go.

"The Tories are doing just what we always feared they would, cutting too fast and punishing the poorest and the most vulnerable in an ideologically driven rush to reduce the size of the state with no regard for the consequences."

The Treasury said spending in Scotland would drop from £28.2bn this year to £27.3bn in 2011-12, then in the following years to £27.6bn, £27.5bn and £27.7bn.

Meanwhile, Mr Moore has agreed to share finance and personnel office functions with the Welsh and Northern Ireland offices.

The Scotland Office has identified 25% of cuts, and will also seek to rent out office space at its prestigious London HQ, Dover House, to other government departments.

Super-fast broadband

Elsewhere, the Scottish government will be allowed access to the £186m fossil fuel levy it has been seeking for years, but Holyrood ministers will be tied into spending the money on renewable energy.

If the money is "drawn down" it will be deducted from the block grant, but Scottish ministers will then be given £250m from the green investment bank, to spend on renewables.

And Mr Osborne said the Highlands and Islands was one of four areas which would pilot the roll-out of super-fast broadband to rural areas which the private sector will take longer to reach.

Mr Swinney has pledged to protect NHS spending, however, he wants to curb pay rises and cut backroom management.

Plans to cut NHS management and scrap police forces to save on administrative costs were floated at the SNP conference over the weekend.