Cuts and pay freeze unveiled in Scottish budget

The Scottish government has announced plans to cut spending and bring in a public sector pay freeze in its budget plans for the year ahead.

Finance Secretary John Swinney said he was facing a UK government-imposed cut of more than £1bn.

Housing, education and tourism spending will be cut, while business rates will rise for large retailers.

Mr Swinney also told parliament he would freeze public sector salaries for a year and end big bonuses.

Unveiling his spending plans and draft budget, he said a 3% "efficiency savings" target would be imposed across public services.

He also confirmed he plans to introduce a pay freeze for public sector workers earning £21,000 a year or more.

Staff earning below £21,000 will receive a minimum annual increase of £250.

The move will apply to Scottish government staff, as well as those working in government agencies and non-departmental public bodies.

It also "sets a framework" for discussions on pay with NHS staff, teachers, police and firefighters, Mr Swinney said.

He said public sector pay represented more than 50% of his budget, and that restricting it would save thousands of jobs.

The finance secretary has also offered a deal to Scotland's councils, agreeing to limit cuts in local authority spending to 2.6% if they delivered SNP priorities such as continuing the council tax freeze for a fourth year.

As part of the deal, the councils would also have to maintain police officer numbers - which have been boosted by 1,000 since the SNP came into power in 2007.

The deal has been accepted by the local government umbrella body Cosla, but Mr Swinney warned that authorities would see their budgets cut by 6.4% unless their leaders agreed to it.

The commitment to officer numbers has been welcomed by the Scottish Police Federation, although it said the 2.6% cut in police budgets would "create challenges".

Mr Swinney also told MSPs that spending in other areas would be protected, such as the NHS, although there is a pledge to reduce the number of senior managers in the health service by 25% over the next four years.

The Scottish government policy of abolishing prescription charges completely next year will still go ahead in 2011, and the existing eligibility for free bus travel for the over-65s will be maintained.

Mr Swinney said spending on capital projects would be sustained, by moving £100m from this year's budget, and plans were still on track for constructing a replacement for the Forth Road Bridge.

Funding for the prison service is one of the biggest losers in the budget, facing a 22% cut while housing will see a cut of 19.3% in the next year.

There will be less money for rail and motorway services, and the axe has also fallen on the education budget with a 12% cut to colleges and universities.

But Mr Swinney said university places would be maintained without the introduction of tuition fees in Scotland, and he also made a commitment to keep smaller class sizes in primary schools.

University and Colleges Union Scottish official, Mary Senior, said: "The cut in higher education funding is much more severe than the overall cut in the Scottish budget.

"However, universities must not use the cuts as an excuse to push for higher student fees or to axe jobs."

However, Scottish Labour's finance spokesman Andy Kerr accused the finance secretary of putting party political interest before that of the country by bringing forward a one-year rather than a three-year budget.

He said: "He is not running a country - he is running an election campaign.

"It is outrageous that our local authorities, health service, our universities, further education colleges, police and fire services are being denied the ability to plan effectively.

"They are all demanding clarity so that they too can set budgets, deliver services and reassure staff, but they cannot because of the SNP."

'Election campaign'

The Scottish Conservatives' finance spokesman Derek Brownlee welcomed the freeze in public sector pay and council tax but also said Scotland needed a "longer-term budget".

The party's transport spokesman, Jackson Carlaw, said: "It is entirely fair that the roads budget should shoulder its share of savings, not least because of the costs involved in the new Forth crossing.

"It would however be regrettable if the reduction in the budget for the maintenance and improvement of our motorways and trunk roads led to greater long-term costs as a result of the roads infrastructure being allowed to deteriorate below an acceptable standard."

Jeremy Purvis, for the Scottish Lib Dems, said: "On the day when unemployment is going up in Scotland but down in the rest of the UK, the SNP are wrong to cut support for enterprise, colleges and tourism, but not to cut high pay, bonuses and waste.

"The budget is too hard on services because it's too short-term.

"This is a dangerous way for every school, hospital and college to try and plan ahead. They can't take sensible decisions if they don't have the future plans."

The leader of the Scottish Green Party, Patrick Harvie MSP, said: "As expected, ministers have decided to defend their outdated, polluting and divisive investment in pet schemes such as the additional Forth Road Bridge, sacrificing socially beneficial projects like housing in particular, and failing to address the central challenge - will the Scottish Parliament prove its worth and use progressive taxation to defend this country against cuts?"