Edinburgh signs up to Swinney's ultimatum

John Swinney delivers his budget

Finance Secretary John Swinney told councils they had a choice between a 2.6 per cent funding cut under an agreement to deliver government objectives or a 6.4 per cent cut if they decided not to sign.

The Government said councils which opted out of the deal, announced as part of Mr Swinney's budget yesterday, would effectively have to raise council tax by around 18 per cent.

Edinburgh's finance convener Phil Wheeler said: "That's not really a choice, is it?"

He said the city's Liberal Democrat-SNP administration had yet to discuss the full implications of the budget, but added "logic would probably dictate" signing up to the Convention of Scottish Local Authorities-backed deal.

Councillor Wheeler said the council had feared a bigger reduction in spending. He said in a worst-case scenario, the council might have had to find savings of up to 130m over three years, but it should now be able to stick to the original estimate of 90m.

The budget included commitments to go ahead with the new Forth Road Bridge, the Edinburgh to Glasgow rail improvements and the Borders railway.

Mr Swinney also confirmed plans for a pay freeze for public sector staff, increased the target for efficiency savings in public services and announced the merger of the General Register Office for Scotland with the National Archives of Scotland.

He said business rates would increase on the largest retail properties, including supermarkets and out-of-town retail parks, a move he said would support town centres.

However, Graham Birse, deputy chief executive of Edinburgh Chamber of Commerce, said: "There may be an argument for it if it was designed to fund town centre or city centre regeneration, but there is no suggestion that's what it will be used for.

"It looks like a straight smash-and-grab raid on Sainsbury, Tesco, Asda and so on. They may be an easy target, but we need to be careful we are not continuing to take from business and failing to recognise businesses are the potential saviour, over time, of restoring some growth to the economy."

The STUC welcomed a commitment by Mr Swinney to no compulsory redundancies but criticised the pay freeze.

However, Lucy McTernan, chief executive of Citizens Advice Scotland, warned the budget would hit many affected by high levels of personal debt.

She said: "Budget cuts, such as the public sector workers' pay freeze, will mean that hard-working families and individuals are hit the hardest."

No change to NHS funding gap

THE funding formula which costs NHS Lothian 70 million won't be addressed next year, it has emerged.

Health chiefs had hoped Health Secretary Nicola Sturgeon would announce that the controversial NHS Resource Allocation Committee (NRAC) would be altered to inject more cash.

Currently, areas such as Glasgow receive more cash because of higher levels of poverty, even though the population here is growing at a far faster rate.

However, there was no mention of NHS Lothian receiving NRAC parity, meaning the health board is facing another major shortfall next year.

The news will place further pressure on bosses, who are already trying to lose 2000 positions and have several major projects to fund, such as a new Sick Kids hospital.

Ms Sturgeon said the overall budget for health boards would increase as of 2011/12.