More woe on the way, warns John Swinney, as his budget is savaged

HARD-PRESSED Scots can expect more economic gloom this year, as the flatlining world economy and swingeing coalition budget cuts leave the country with “acute challenges”, John Swinney has told MSPs.

The finance secretary yesterday set out his spending plans for next year, with a warning that Scotland faced its toughest period since the onset of devolution more than a decade ago.

But opposition MSPs said the government’s £28.6 billion spending programme failed to live up to its billing as a blueprint for jobs and growth. Instead, they called for more spending on housing, colleges and railways.

The Scottish Government’s budget is being cut by about 8 per cent over the four years from 2011-15, Mr Swinney said in Holyrood yesterday.

“We continue to face acute challenges to public spending,” he warned. “Scotland continues to face significant challenges as a result of global economic conditions and the UK government’s approach to public finances.”

The Scottish Government was trying to prioritise job creation and economic recovery in the face of Westminster constraints, he said.

The plans were first set out last September, when Mr Swinney identified £40 million for “affordable housing”, an energy skills academy and an employer recruitment scheme designed to create up to 10,000 jobs for young people.

Labour wants the government to reverse a £34.6m cut to colleges, invest extra cash in housing and reinstate the “full scope” of rail improvements between Edinburgh and Glasgow.

Ken Macintosh, its finance spokesman, conceded that Mr Swinney had to deal with a “difficult” allocation from Westminster. But he said: “We are divided on the SNP’s claim that this is a budget for jobs and growth, when all the evidence points to the contrary.”

The Conservatives called for Scottish Water to be taken out of pubic hands and save taxpayers more than £100m a year. Finance spokesman Gavin Brown said: “On the day that the budget was launched, there was almost nobody that accepted the Scottish Government’s argument that it was a budget for the economy.”

Last month, the SNP failed in its attempt to steer the finance committee to support its belief that it was “a budget which encourages sustainable growth”, after former SNP MSP Jean Urquhart voted with the opposition to reject the motion.

Liberal Democrat leader Willie Rennie also called for the colleges cut to be reversed and for more spending on childcare. “We would say that 40 per cent of the poorest two-year-olds should get 15 hours of nursery education each week,” he added.

The Greens called the budget “seriously flawed”. Co-convener Patrick Harvie said the SNP could help hard-pressed public-service workers with a wage rise that kept pace with inflation.

“Shovelling precious cash into short-lived capital projects won’t guarantee economic recovery,” he said.

MSPs voted through the general principles of the budget last night.