Scottish Budget Bill clears first hurdle

The Scottish government's budget has passed its first parliamentary hurdle, despite opposition concern that it fails to protect the economy.

Finance Secretary John Swinney said his £33bn plans would boost growth and protect frontline jobs, while the budget was being slashed by £1bn.

But Labour, the Lib Dems, Tories and Greens are seeking changes to the Budget Bill before finally backing it.

Meanwhile, the SNP's plan for a large retailers tax was voted down by MSPs.

Mr Swinney said the levy would raise an extra £30m to help offset budget cuts as a result of Treasury spending reductions and affect about 0.1% of businesses.

But Holyrood's local government committee rejected the so-called "Tesco tax", after other parties said it would make Scotland less competitive.

The retail tax plan faces a final vote next week, but, in a reflection of the committee's decision, is likely to be rejected.

Ahead of the Scottish elections in May, Mr Swinney told parliament it was vital for all parties to work together to pass a budget - which faces its final vote in parliament at the start of February.

"This Budget Bill takes steps to enhance the resilience of the Scottish economy, protect frontline services and improve our environment," he said.

Mr Swinney said the minority SNP administration was willing to consider changes, but warned: "Where other parties wish to make proposals for increasing expenditure in support of particular objectives, I ask that they also bring forward proposals for identifying the resources to fund such changes."

Labour and the Lib Dems abstained in the vote, while the Greens voted against, meaning the spending plans now go forward to the next stage of parliamentary scrutiny.

But Labour finance spokesman Any Kerr said his party would not support the budget at the final stage unless there were "substantial changes" to promote growth and provide young people with work and other opportunities.

He said: "In Scotland today there are 225,000 unemployed people - families burdened by unemployment and wondering how they will make ends meet.

"The number of 16 to 24 year olds out of work for a year or more has increased by a staggering 338% - this budget should be about jobs, jobs and jobs."

The Tories' Derek Brownlee said the proposed budget was "in purgatory" - neither "perfect", nor "beyond redemption".

He said: "We have outlined our main concerns on where the government needs to act to improve the budget - a greater focus on job creation in the private sector to support and rebalance the Scottish economy, and reform of public services to enable them to be protected as budgets fall."

Jeremy Purvis, of the Liberal Democrats, who called for more college funding and restrictions in top public sector pay packets, said the budget failed the test of the government's top priority of growing the economy.

He told MSPs: "It has a dual strategy now - it blames the reduction in funding from the UK government and it now is focusing almost exclusively on some public services in some policy areas at the expense of others."

In a reference to the UK chancellor, Green MSP Patrick Harvie said the budget followed the "Osbornomics" theory of "cut and hope".

"Scotland will pay the price for the SNP's timidity and conservatism unless parliament can find its backbone and act to stop them," he said.

The Scottish government's draft budget will see cuts to spending and a public sector pay freeze for government staff, government agency workers and those employed by quangos earning £21,000 a year or more.

Mr Swinney has also set a 3% "efficiency savings" target and has provided a "framework" for pay talks on pay with NHS staff, teachers, police and firefighters.

At the same time, the finance secretary has offered to limit cuts in local authority funding from 6.4% to 2.6% if councils deliver SNP priorities such as continuing the council tax freeze for a fourth year and maintaining police officer numbers - which have been boosted by 1,000 since the SNP came into power in 2007.

NHS spending would be protected, while the abolition of prescription charges will go ahead in 2011, and existing eligibility for free bus travel for the over-65s maintained.