Scotland in line for £600m Budget boost

The cash will come to the Scottish Executive as a result of the Barnett Formula which gives Scotland a proportion of any extra public spending in England.

And there will be more to come as spending on the National Health Service and other public services goes up south of the Border.

Although it will be up to ministers in the devolved administration to decide where the cash should be spent as part of its three-year spending review now under way, Scottish Secretary Alistair Darling has hinted that the money should go on education and universities.

Today Prime Minister Tony Blair and the Chancellor were defending the financial package against Tory attacks that it would mean inevitable tax increases if Labour wins the next election.

And the Government was also under fire from civil service trade unions for proposing to slash 40,000 jobs in the public sector. Many of these will be in Scotland where thousands are employed in the Department of Work and Pensions - which is facing 30,000 job losses - and the Customs & Excise and the Inland Revenue which are to be merged saving more than 10,000 posts.

And there was also bitter criticism from the Scotch Whisky Association which said that freezing spirits duty for the seventh budget in a row would not offset the introduction of strip stamps on whisky bottles.

The SWA said it was "bitterly disappointed" with the move which would do nothing to combat fraud and would cost one in 50 jobs in the distillery and distribution industry, with small producers hardest hit.

Mr Brown said today that the extra money he was finding from increasing efficiency and borrowing would go into frontline services across the UK and would not require increases in taxes like income tax and VAT which he froze yesterday.

As a result of the Barnett Formula, the Scottish Executive will have at least 183m extra in 2006-7 and a further 407m in 2007-8.

Edinburgh Central MP Mr Darling said: "Of course, it is for Scottish ministers to decide how these monies will be spent in Scotland, but these priorities directly complement the enterprise and education policies of the Scottish Executive."

Scotland’s Finance Minister Andy Kerr said the extra money would help the Executive to deliver continued economic growth. "That means focusing on skills, innovation, technology, transport infrastructure and other issues businesses are concerned with."

But Alex Salmond, leader of the Scottish National Party at Westminster, described the Budget as "grey and blundering" and risking Scottish jobs - especially in the vital whisky industry because of tax stamps.

And the Tories were concentrating on Mr Brown’s spiralling government borrowing, fearing that the package was a "ballot box Budget", aimed at delivering sweeteners to voters in advance of a UK General Election next year.

With figures of 37.5 billion for borrowing in the coming year, Tory leader Michael Howard warned: "This is a credit card Budget from the credit card Chancellor - a borrow now, tax later Budget from a borrow now, tax later Chancellor."

Liberal Democrat Treasury Spokesman Vincent Cable, standing in for a sick Charles Kennedy, said Mr Brown had ducked tough choices on the economy until after the next election.

But the Confederation of British Industry’s director general Digby Jones said: "The Chancellor has heeded company warnings about damaging rises in business tax and responded to calls for measures to invest in enterprise, education, science and transport."

And Matt Smith, Scottish Secretary of public sector union Unison said: "this is a win-win Budget for public services".