Labour tells Salmond: Go ahead and quit

LABOUR plans to call the SNP's bluff over the Scottish budget if Alex Salmond repeats the threat he made last year to resign as First Minister.

Negotiations over the budget look set to go down to the wire, with the SNP losing one potential set of allies yesterday after the Liberal Democrats stormed out of a meeting with John Swinney, the finance secretary. He refused to back their call for a 2p income tax cut, which would take 800 million out of the budget. This means that, as in 2008, the Nationalists need the backing of the Conservatives and Greens to get their budget through.

In particular, Mr Swinney will probably have to find 100 million to pay for the Greens' demand for free insulation to be provided for households across Scotland.

Faced with uncertainty last year, Mr Salmond announced the day before the final budget vote that he and his government would resign if defeated.

This wrong-footed both Labour and the Liberal Democrats, who feared that such a move would lead to a new election at a time when the SNP was extremely popular and Labour was at rock bottom.

Their abstentions in the final budget vote were seen as a gaffe and they have been derided for it since.

But this year, they have checked parliamentary rules which state that a new election would not have to be called. Instead, the Queen would simply have to appoint a new First Minister based on the recommendation of Alex Fergusson, the Scottish Parliament's Presiding Officer. By convention, his recommendation would be the candidate who got the most votes in the chamber, but not necessarily a majority of votes.

Labour has privately made it clear that it will put its Scottish leader, Iain Gray, forward for First Minister should Mr Salmond resign.

Labour has had discussions with the SNP over the budget and issued a series of demands.

These would be to increase health and transport spending, drop plans for a local income tax, and scrap the 23.5 million Scottish Futures Trust. The list was delivered in the knowledge that it would be rejected.

A senior Labour source told The Scotsman: "It's pretty obvious that we will not be supporting the SNP's budget and we will be sticking to our demands."

But he added: "If Alex Salmond wants to resign, let him. We will be happy to put Iain Gray forward as First Minister."

The budget bill is due to be published on Friday, with voting on it expected later this month and in February.